[photopress:property_market.jpg,full,alignright]Investors in China are increasingly alert for signs a prolonged expansion in its property sector might suddenly go the way of its stock market, with a big price correction downward.
Not helping sentiment are recent warnings about market woes by well known property developers, including Pan Shiyi, chairman of Beijing’s Soho China, and Wang Shi, chairman of China Vanke, of Shenzhen.
Pockets of trouble have emerged, particularly around the southern factory town of Dongguan, where developers have taken the unusual step to slash prices to move newly built units.
At least one large agency firm has shuttered outlets in a bid to stay in business and the real-estate sector has underperformed on the stock market.
According to the 2008 Annual Report on the Development of China’s Real Estate published by the China Academy of Social Sciences nationwide the picture on property prices is more stable than these stories suggest.
The report reads: ‘Though the transaction volume began to decline in the end of 2007, it is still too early to say it indicates a turning point for property prices.’ It describes how long-term trends like urbanization won’t be derailed by cyclical problems.
The authors shy away from specific numeric predictions for 2008 — in order not to influence the market, they say — but say the average price for residential property in China rose 17.5% last year to RMB3,665 (about $524) a square meter. This is the strongest annual gain in four years.
Source: Deal Journal