Developer: China property prices to fall

A real estate agent talks to prospective buyer behind a scaled model of a housing development in Beijing. The government has instructed banks to stop extending mortgage loans to people buying third homes in major cities. – AFP

BEIJING: Property prices in China’s major cities will fall later this year because of the government’s tightening campaign and a coming surge in housing supply, the country’s top listed developer said in comments published yesterday.

The government will not end its clampdown on housing speculation even as the economy slows, and developers who try to resist lowering prices are being unrealistic, Wang Shi, chairman of Vanke, was quoted as saying by the Securities Daily.

“Many developers who do not cut prices now are making a bet on policy,” said Wang, suggesting that they were hoping that Beijing would back down on its property controls.

Wang said the issue was of social, not just economic, importance. “Property prices in some cities have risen to levels unacceptable to the middle class,” he said.

Vanke and other big developers, including Evergrande and Greenland, have cut prices, boosting their sales. The value of properties sold by Vanke in July rose 65% from a year earlier to 8.44 billion yuan (US$1.25bil).

Showing its determination to cool the real estate market, Beijing has instructed banks to stop extending mortgage loans to people buying third homes in at least four major cities, including Beijing and Shanghai.

By Reuters