BNP analysts Chen Xingdong and Isaac Meng said in a report, “The State Council and political leadership have demonstrated a strong political will, at least at a central level, to curb the property bubble.” The cabinet “considers elevated property prices and further rises as not only economic-financial risks but also as undermining social stability.”
Home prices could fall
Property prices in 70 Chinese cities surged by a record 11.7% in March from a year earlier, prompting the government to announce measures last week that increased the size of down payments, raised interest rates on second homes and barred banks from funding purchases of third homes.
BNP joins Citigroup Inc. in predicting prices may drop as much as 20% as tightening measures take hold. A “turning point” in the real-estate market is “unavoidable,” Citigroup analysts Oscar Choi and Marco Sze said in a report.
Business Week reported BNP analysts said housing prices in so-called first-tier and second-tier cities are “clearly in a bubble…First-quarter property sales and prices could be at a significant cyclical peak.”