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Post-Olympic housing prices in Beijing to go up after adjustment

By Du Xiaoli (chinadaily.com.cn)
Updated: 2008-08-22 17:40

The housing prices in Beijing after the Olympics will go up following a period of adjustment, said Chen Jian, executive president of Beijing Olympic Economy Research Association, at a press conference on Beijing Olympics and Beijing Economy held yesterday.

Chen said that general housing prices in Beijing were rational when the city prepared the Olympic Games. However, some bubbles arose between 2005 and 2007.

From the end of 2007 to the first half of 2008, the city's real estate market entered a period of adjustment, and the period may be prolonged after the Games. The room for housing price declines would be very limited and the ensuing huge housing demand would support the city's housing prices.

China's real estate industry has entered a new era with reasonable profit margins and rational competition, according to experts at a forum sponsored by Beijing Times, Peking University and Renmin University of China.

The shrinking transaction and price declines in China's key property markets mark an end to the era where property enterprises could earn huge profits.

Housing price trends are also a focus for banking circles.

Although different banking insiders held various estimations on real estate price trends, many banks said the current adjustment and control should be focused on preventing a big slump in housing prices, according to a banking meeting held in Shanghai.

Real estate investment accounted for 32.2 percent of Shanghai's total fixed assets investment in the first seven months this year.

Banking insiders are concerned that if a housing slump emerges, it will have a great impact on the economy, due to the high proportion the real estate investment accounted for.

Banking insiders in Nanjing and Hangzhou also believed that their local real estate market prices were in the midst of a high-level adjustment period and the possibilities of a decline still existed.

Due to the high proportion of gross housing loans in developed areas, the China Banking Regulatory Commission issued a notice on conducting pressure tests of real estate loans in key areas to local branches in Guangdong, Jiangsu, Zhejiang, Shanghai, Beijing, Shenzhen and Ningbo in mid-August, in an effort to further know the impact of the real estate industry's fluctuation on banks' potential risks.

Sluggish sales of real estate in Beijing and Shenzhen have exacerbated concerns. Worried about the risks of individual housing loans, banks have been more cautious with business expansion. Meanwhile, risks with real estate development loans were often less than optimistic.

Vanke, one of the country's leading property developers, have predicted the industry's adjustment in advance and the company will be safe and sound facing the severe situation, said Yu Liang, president of the company, in an e-mail to its staff.

The prospects of China's housing sector are still cheerful and worth expectations, Yu said.

Yu also forecast that deeper determinant factors regarding the industry's development trends in the future suggest no ultimate changes.