People's Daily: First Tier Home Prices Will Drop

No new information. Towards the end it quotes a researcher who says if credit remains tight, prices could drop substantially in Q3.

That prediction maypartly explain: China's First Mortgage Debt Since Crisis Shows Li Concern
China will revive mortgage-backed debt sales this week after a six-year hiatus, as the government extends help to homebuyers in a flagging property market.

Postal Savings Bank of China Co., which has 39,000 branches in the country, plans to sell 6.8 billion yuan ($1.1 billion) of the notes backed by residential mortgages tomorrow, according to a July 15 statement on the website of Chinabond. The last such security in the nation was sold by China Construction Bank Co. in 2007, Bloomberg-compiled data show.

Premier Li Keqiang is seeking to avert a collapse of the real-estate market after data last week showed new home prices dropped in a record number of cities in the world’s second-largest economy.

北上广深房价失守 未来将继续走弱
National house prices continued to weaken basic foregone conclusion. Recently, the National Bureau of Statistics released the June 70 cities housing sales price changes, according to preliminary estimates, the first, second and third tier cities in new commercial housing prices were mostly slightly lower, and the front line north of Guangzhou-Shenzhen prices also fell, adding price ranks. Experts said that in the credit crunch, high inventories in the background, the property market will take time to digest inventory, fear of the future will further maintain cooling trend.

"Hedge Heights" weak prices upward

Data show that in June the new commercial housing prices decline in the city broke the 50 mark, reaching 55, hit a new high since 30 months. Only 70 cities in eight cities rose, flat city 7. In the second-hand housing prices, compared with the previous month, 70 cities, prices fell in 52 cities, 11 cities were flat, rising only seven cities.

"According to preliminary estimates, the first, second and third tier cities in new commercial housing prices were down slightly, down 0.4%, 0.5% and 0.5%." National Bureau of Urban Division Senior Statistician Liu Jianwei analysts said, a decline in the number of cities showed a continued increase in the trend; decline from looking up, 70 cities, the highest price of newly built commercial housing rose 0.2%, the lowest decline of 1.8%; second-hand housing prices rose to a maximum of 0.1%, the lowest was down 1.5%.

Fall in house prices in the city, has been considered "high hedge" in the north of Guangzhou deep four-tier cities also not spared this time. Beijing's new housing prices, new commercial housing prices although still edged up 0.1% qoq, but second-hand house prices fell by 1.3% in the previous month; and since May, Shanghai and Shenzhen, new commercial housing prices for the first time this year Since the decline, the price of Guangzhou also joined the ranks.

"From June 70 cities new commercial housing sales price variation, the biggest feature is the price gains slowed in June, has been without a city house prices rose more than 10%, even if the line is relatively strong prices The city also began to fall from June to below 10%, which reflects the country since the second quarter of the overall market is not optimistic. "with policy advice, research director Zhang Hongwei said.

Need time to digest the property bubble

Tier of appetite, fall line. For this round of the reasons for dropping prices is accelerating, industry experts believe that due to the supply and demand stabilize the market "to buy or not buy up" mentality, as well as from the housing and other affordable housing into the reasons for the choice of the people, such as the real estate market has emerged a certain degree of "excess capacity", is the evolution of the stock of the incremental age to age, "Activation needs to digest the stock" has become the primary goal of the housing market.

"Overall, the main reason leading to a slowdown in house prices rose overall market is too large destocking pressure affect the credit crunch and market indicators improved sales ratio and other factors, some development companies face because of funding pressures, semi-annual results Indicators 'rush in the harvest' and other pressures had to take 'price change' strategy, and even some of the projects take a substantial price reduction strategies in order to return the funds as soon as possible, resulting in 70 cities in 55 have experienced a decrease. "Zhang Hongwei analysts said.

In the Central Plains real estate chief analyst Zhang Dawei seems that current trends indicate that lower prices have no island, although some cities to cancel the purchase allows the emergence of short-term market recovery, but then did not show a recovery trend, on the one hand this is due to the current credit policy continued tight, 60-70% down payment threshold greatly improves the "buying and selling of a" common market replacement crowd funding pressures; hand experience can also be considered after 10 years of rapid development, has entered the real estate industry to shift from the high growth and stable development of the transitional phase.

The overall price adjustment will continue

The face of continued downward transaction data, the market for future price movements generally have conservative expectations.

"The current downturn in market sentiment, stock prices high and still in a rising trend, and together with the developers facing financial difficulties, it may be in the 'golden nine silver ten' before the arrival of faster turnaround, so the downward pressure on prices may also gradually increase big. "UBS chief economist Wang Tao said.

"If the majority of the city commercial bank credit remained tight in the second half, did not immediately cut first mortgage interest rates, and even the first mortgage interest rates continue to go up, the real estate market trading volume may still be to maintain the current relatively depressed state, then the third quarter , the credit crunch in the banking market background, large housing prices 'price change' behavior may encourage enterprises to make moderate price adjustments, or even a substantial price reduction. "Zhang Hongwei said.

Enterprises have to make price adjustments in order to maintain profitability targets, and control policies on the property market as a whole will also be taken to ensure that the direction of local conditions just to be satisfied. Department of Housing and Urban Policy Research Center main Renqin Hong said that the future of the real estate and then the central level will not take "one size fits all" type of regulatory policy; around supply and demand will be adjusted depending on the circumstances, while the national center of the city is still the bottom line should be no unconditional purchase of relaxation , will continue to curb speculative investment demand, as buyers demand to ensure a reasonable regulation of mind.

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