China housing prices could halve by 2011: report
Economist sees stagnation in real estate once government stimulus wears off.
HONG KONG (MarketWatch) -- China's property market will likely fall by 40% to 50% in value during the next two years, as transaction activity subsides and as the export sector continues to slump, according a senior Chinese economist quoted in a report Tuesday.
Cao Jianhai, a professor at the Chinese Academy of Social Sciences, told the Financial Times newspaper that the current rebound in the property market was unsustainable and driven by a flood of liquidity and fraudulent activity rather than real demand.
He was cited as saying urban residential property prices would decline by 40% to 50% in the next two years from their levels at the end of 2008. However, he added that housing prices may not fall in the near term, but rather were likely to collapse next year, followed by many years of stagnation.
Recently government investigations had turned up examples of fraud, including developers using fake mortgages to offload apartments onto the books of state-run banks.
Many of these state-run banks are facing political pressure from Beijing to ramp up spending as part of the central government's plan to boost the economy.
Economist sees stagnation in real estate once government stimulus wears off.
HONG KONG (MarketWatch) -- China's property market will likely fall by 40% to 50% in value during the next two years, as transaction activity subsides and as the export sector continues to slump, according a senior Chinese economist quoted in a report Tuesday.
Cao Jianhai, a professor at the Chinese Academy of Social Sciences, told the Financial Times newspaper that the current rebound in the property market was unsustainable and driven by a flood of liquidity and fraudulent activity rather than real demand.
He was cited as saying urban residential property prices would decline by 40% to 50% in the next two years from their levels at the end of 2008. However, he added that housing prices may not fall in the near term, but rather were likely to collapse next year, followed by many years of stagnation.
Recently government investigations had turned up examples of fraud, including developers using fake mortgages to offload apartments onto the books of state-run banks.
Many of these state-run banks are facing political pressure from Beijing to ramp up spending as part of the central government's plan to boost the economy.
