It is easy to get confused as the heading shows; almost impossible to see an overall pattern. In April non-residential property prices grew 6.5%, rate of growth down 0.4 percentage points.

So non-residential was going up, but not as much as it used to. This decline in the rise is patchy. And there are places where it is all decline.

According to a report released by Centaline (China) Shenzhen-Hong Kong Property Research Center, the average housing price in Shenzhen’s six districts dropped to RMB11,143 per square meter in May, down 23% from a year ago and 7% from April, on Tuesday. Those are substantial drops.

Can Shenzhen can look forward to boom times again?

Wang Shitai, brand manager of Sunstars Real Estate in Shenzhen said, ‘Despite the rise in transactions, I’m not optimistic about Shenzhen’s housing market in the near future.
‘Developers will have to slash prices further in order to boost sales to maintain their businesses. Many have offered prices as low as RMB5,500 per square meter in order to attract enough buyers.’

China Overseas Property, a major real estate developer in Shenzhen, launched a new housing estate, Xi’an Huafu, in Bao’an District on May 31, with opening prices of RMB5,500 per square meter, the lowest in the district this year.

The developer launched another project, Kangcheng Guoji, in early June, and set the opening price at RMB4,988 per square meter.

So, no, the boom days are not likely to return in the near future. And, yes, this is what the government was working towards.

Guo Shiping, an economics professor at Shenzhen University, said ‘When prices drop further and more investors fail to pay the mortgages, all of them will suffer.’ That is what happened with the sub-prime crisis in the United States. Only in China it will not be such a disaster.
Source: Window of China

The headline comes from the International Herald Tribune which is not normally given to gloomy stories.

It reports that although official figures show investment in property rose 32% in the first four months from a year earlier, developers are worried as bank loans dry up and the cost of tapping other sources of funds rises.

Falling home sales are a particular threat to developers, who typically rely heavily on cash from the sale of unfinished projects to pay for operations and expand.

According to the China Index Academy, which is affiliated with SouFun.com, a leading real estate Web site, the number of residential transactions in Beijing fell 13.7% in April from March and was down 56.4% from a year earlier.

Not a happy scene.

Zhang Xinming, chairman of Walter Asia, a developer based in Jiangxi Province, said maximizing cash flow was now his main strategy.

Walter Asia has accelerated the development of land that it had bought cheaply, hoping to cash in quickly.

It is also shifting its focus from high-end housing preferred by investors to more affordable apartments that are still in demand by regular home buyers. Which is what the government wanted to happen.

Zhang Xinming said, ‘The ability of Chinese developers to get through the harsh winter is growing.’
Source: International Herald Tribune

China will create five new ’super ministries.’ The goal of this move is to streamline the bureaucracy, clarify conflicting responsibilities, and curb corruption.

1. The National Development and Reform Commission — NDRC — will focus on macroeconomic planning, paying particular attention to price controls and the management of energy policy.
2. The Ministry of Finance will reform and improve its management over budget and taxation.
3. The People’s Bank of China will strengthen the system of monetary policies and improve the mechanism of exchange rate formation.

The State Council also plans to strengthen the coordination amongst the three above-mentioned bodies,

One area that has not been addressed is the lack of supervision over the NDRC. The three bodies are not on equal footing. The NDRC will set annual control targets to coordinate monetary, fiscal, and industry policies, and this means that it will remain a key player in the State Council.

The Ministry of Construction change to the Ministry of Housing and Urban and Rural Construction was according to Forbes.com, in order to emphasize its role in building affordable housing for low-income families in China. Our illustration is of elderly low cost housing in Chongging.

As provincial governments and city councils assume powers the NDRC had in the past, the decision-making process will become more decentralized. This may bring about positive changes, as it should clarify which level of government is responsible for interpreting laws and regulations and approving projects. It is equally possible that the transition of power to the local level may have a negative impact on construction in areas of China.

The new organizational scheme places the Ministry of Construction’s urban public transport management functions under the new Ministry of Transportation.

The aim of the restructuring and creation of ’super ministries’ is to improve regulation, rule of law, and adherence to a market-based economy while simultaneously curbing corruption, decreasing pollution, and cutting down on turf wars between ministries and disparate sectors of the bureaucracy. All of these are long-standing objectives of the central government.
Source: Mondaq

An industry report released by the Shanghai Real Estate Association concludes that while nationwide investment into the real estate industry grew rapidly over the past year, domestic supply of small- and medium-sized apartments still remained inadequate almost two years after the 70/90 policy was introduced.

The report, conducted annually by the China Real Estate Association, said the speeds of sales of small- and medium-sized apartments indicated a great shortage of such products.

The report said, ‘Statistics compiled in 40 major Chinese cities between January and December last year has found that approved space for presale and registered sold space for apartments below 90 square meters in size both accounted for about 25% of the total, which means a full digestion of such products through the past 12 months,’

In May 2006, the Ministry of Construction announced that the combined GFA (gross floor area) of all residential units below 90 square meters in size should account for more than 70% of the total GFA of a project.

The policy, applied to residential developments that were given approval to commence work after June 1, 2006, was designed to raise the supply of small- and medium-size homes and discourage construction of luxury houses.

In Shanghai, less than ten ‘70/90′ projects have been released to the market.

Source: Shanghai Daily

A senior Ministry of Housing and Urban-Rural Construction official has said officials’ ability to keep real estate prices stable and affordable will be a major criterion in deciding their performance and career prospects.

Shen Jianzhong, the director of the real estate department of the ministry said, ‘We should be setting up an accountability system for governments and officials soon.’

The newly approved ministry, to replace the Ministry of Construction, is responsible for realizing China’s new housing policy targeted at ‘ensuring everyone is sheltered’.

Shen said local government officials should monitor housing prices to prevent price volatility and ensure that homes remained affordable, but he did not provide details of the accountability system.

Shen said the country is still faced with mounting pressure from real estate price hikes as supply cannot meet rising demand. The land available is limited, which has a big impact on housing prices,’ Shen said.

Qi Ji, the vice-minister of construction, said the central government has decided to allocate 70% of land supply this year to build homes for middle and low-income families and the needy.

He added, ‘Local governments are also required to increase funding in this area.’
Source: China Daily