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 Chinese property market has seen house prices in 70 large and mid-sized Chinese cities rise 11% year-on-year in the first quarter according to the National Development and Reform Commission (NDRC).

Prices of new apartments jumped 11.8%, down 0.4 percentage points from the same quarter last year, while prices of second-hand flats rose 11.5%, up 1.7 percentage points.

Urumqi, capital of the north-western Xinjiang Uygur Autonomous Region, continued to top the growth list with a 25.3% increase in March. It was followed by Haikou and Ningbo, which saw property prices rose 18.3% and 18.2%, respectively.

Chinese real estate is not all good news. For example prices of new homes in Shenzhen, the southern city bordering Hong Kong, and Nanjing, capital of east China’s Jiangsu Province, fell 4.9% and 0.8%, respectively, from the previous month.

Stricter controls on property speculation have made it much harder to ramp up prices, while the government’s credit squeeze is already hitting developers. In Beijing, strict loan quotas have succeeded in cutting off credit to all but a handful of the biggest and best-connected developers, which can now only secure loans priced at 10% above the nominal interest rate.

China Construction Bank, the country’s biggest mortgage lender, reckons that a 10% drop in the market should cause no major problems, but a 20-30% drop would be very tough for the country’s still fragile banking sector to handle.
Source: HomesGoFast

Several major cities around the Pearl River Delta, including Guangzhou and Shenzhen, have seen a sustained dip in property prices over the last few months. But for Guangzhou, things finally seem to be looking up, with the latest official figures appearing encouraging.

Newly-constructed properties in Guangzhou in March went for RMB9,316 per square meter, a 0.1% increase from February. Meawhile, transaction volumes for new properties have also gone up by more than 60%, although this figure is still 30% lower than that recorded for the same period last year.

Having said that this is the first time in months that Guangzhou’s property market is moving up instead of down.

So Guangzhou has at least started on the right track — from the sellers point of view — while Beijing is positively bullish.

In March, the price of new houses price was up nearly 18% year on year. The average price for new properties inside the fourth ring road has hit a record high of RMB16,935 per square meter.

At the same time, 60% more land has been set aside to build houses.

Nie Meisheng, president of China Real Estate of Commerce, said, ‘I think it’s a signal. The wait and see stance that potential buyers are holding at present will change gradually. I think property markets in first tier cities like Beijing, Shanghai, Guangzhou and Shenzhen, will warm up in the coming months.’
Source: CCTV.com

If this were not originally published in The Economist one would tend to dismiss it as the outpouring of a sub-editor’s heat enfev’red brain. But this is The Economist which is a journal most commentators consider above petty headlines or comment.

It suggests that the property boom was responsible for most of the serious fortunes created in China. And it allows: ‘Although stockmarket sentiment towards China’s property developers has plummeted, there does not yet appear to be a comparable drop in the prices of flats or rental rates for offices. Price appreciation has slowed but there are no outright declines, at least in the national statistics.

It then says that unofficially, however, there are indications prices in some regions may well be under pressure.

Shanghai. Many developers have retained the list price for units but are offering ‘rebates’ which can take 10% or more off the purchase price. Numerous units are being held off the market in the hope of a recovery.

Shenzhen. Only a year ago was an extremely hot market buyt the average price of flats in the city has fallen by 28% since October. There are reports that the value of some may have dropped by half.

Beijing. Areas around the capital city have been more resilient but the rate of appreciation has clearly slowed.

Explanations for the crunch are not hard to find.

In southern China business conditions have deteriorated, notably for exporters.

The government has tightened credit where it senses property speculation. Rather than build portfolios of stocks, it had become popular in China to purchase multiple flats as an investment, until the government late last year ordered 40% down-payments and imposed transaction taxes on all but primary homes (a policy that, in light of the current distress, is now being reconsidered).

Ronnie Chan, chairman of Hang Lung Properties, one of the leading developers in China, and seen in our illustration, wrote last month that the second half of 2007 was characterised by a ‘land grab’ on the mainland with no price discipline.

As examples, he referred to a site in western China sold at government auction to a competitor for 20 times what he had paid for a similar property the year before; another in Shanghai went for ten times as much. Recovering the cost of the investment would take years, he predicted.

The Economist ended this tale of woe with: ‘Few would be surprised if some of the more aggressive firms do not have the financial strength to survive that long.’
Source: The Economist

China Merchants Property Development has just bought into a villa project in Shanghai and is now looking at the acquisition of another property in the same city.

A subsidiary of the company based in Shenzhen paid RMB353 million for a 60% stake in Shanghai Fengyang Real Estate, which is responsible for Hyde Garden, a high-end residential real estate project in the Baoshan District of Shanghai.

The project is designed to cover a total land area of about 385,300 square meters. The apartments in the first phase have been sold out and those in the second phase have started marketing at the prices ranging from RMB11,500 to RMB25,000 per square meter.

China Merchants is also looking at another used land project on the skirts of Shanghai. It will likely take over the project from a local developer.

China Merchants Property is a state-owned integrated property company.
Source: Trading Markets