[photopress:china_real_estate_1_2.jpg,full,alignright]According to a report by the National Development and Reform Commission property prices in 70 major mainland cities increased an average 7.1% year-on-year last month, compared with a 6.4% rise in May.But an economist said price rises will ease (Note carefully there is no suggestion they will stop) in the second half.
Liao Qun, chief economist and strategist of China banking at CITIC Ka Wah Bank, said property sales in the three months ended May accelerated to 30% year on year, from less than 20% in the previous three months.
Liao Qun said, ‘Acceleration in prices is still under way in major cities. Prices in Shenzhen and Beijing were up 14.25 and 9.6% year on year, respectively, in May.’
He said this is mainly due to the ‘wealth effect’ arising from the stock market boom. He said, ‘The stock market boom in China is expected to be a long- standing factor underpinning the property sector in the years ahead.’
The government introduced tightening measures in 2004 to curb excessive real estate investment, rising sales and prices.
Liao Qun said the recent move by the China Banking Regulatory Commission urging commercial banks to limit loan growth to no more than 15% a year will have a greater impact on the real estate market than the increase in interest rates.
He said the new round of monetary moves was mainly aimed at stabilizing the rapidly expanding economy, not to rein in the property market. But, he expects property price increases in the 70 major cities will slow to 5.3% in the second half. Which, no matter how it is argued, is still an astounding price spiral.
Source: The Standard