china academy of social sciences says house prices will continue to rise next year
News Posted On: 20 November 2009
The annual report by the China Academy of Social Sciences (CASS) released on Thursday says housing prices could continue to rise next year, citing a surge in bank lending and – guess what - expectations of inflation. We did say the 'deflation dragon' was really a paper tiger, didn't we?
On its Annual Report on the Development of the Housing Market in China between 2009 and 2010 CASS sees the property market stabilising in the second half of next year. In the first quarter of 2010 it sees demand dropping, although prices will not. In the second half of the year it says investment in real estate should rise again.
The report also expects the Consumer Price Index to rise in the second quarter, and that a raft of policies could push sales figures and prices higher in 2010.
"Due to rising inflation and inflation prospects at the end of the first quarter along with credit expansion in the beginning of the year, property prices may pick up in the second quarter." said CASS' Dr. Ni Pengfei.
The property market in the next year should be adjusted and controlled to maintain stable market growth and dampen speculation and fluctuations the report said.
"Measures should be taken to encourage consumption because rising sales lead to growing investment. Speculations should be prevented because that can result in market fluctuations," added Dr. Ni Pengfei.
Developers should have ample liquidity and be willing to pay high prices for land as an early recovery in the property market takes hold. The developers would be encouraged by local governments who want to raise revenues from land sales.
CASS indicated land prices in Shanghai, Beijing, and Hangzhou were likely to show higher than average growth than other areas of China.
In Beijing it was reported on Biz China internet TV that the average price set for new projects in November was up a eye-watering 17% over September. Small wonder the buyer uptake dropped in the same month.
I guess this is what CASS had in mind when it called for legislation to 'maintain stable market growth and dampen speculation and fluctuations'.
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