"Housing prices in China will go two ways in the year of 2008," said Pan Shiyi, chairman of SOHO China, a famous real estate development company. According to Pan, commercial developments located nearby supportive housing projects will get a cold shoulder from the market. The supportive housing program is designed by the government for people without their own apartments and can't afford commercial housing. The program includes "low-rent housing", "affordable housing" and "housing with limited prices". The prices for the houses in these projects will be controlled at a certain level by the government. Hence the prices of those commercial developments nearby will be pulled down.
However, at the same time, the prices for other commercial developments, mostly high-end developments, will continue to rise.
A vanguard in China's property development market, Pan was described as one of the most eye-catching real estate developers in China. Besides a home developer, Pan Shiyi is also regarded as an influential media figure as he often makes his presence public through the media. During an interview with the First Financial Daily, Pan Shiyi predicted that the new commercial developments located outside the Beijing's fifth ring road will suffer more from the supply of supportive housing. Pan said the average price of the commercial developments outside the fifth ring road will be around 8,000 yuan/sq meters (or about 1126 USD/ sq meters) as there are large quantity of land supply in this area. And those developments will be hugely influenced by supportive housing, which are priced less than 8,000.
Developers hoped the real estate market can start to warm up again starting this March. However, the housing price continued to go down this month. Although most of the developers refuse to accept the truth, they have to face the reality that the supportive housing projects have partially fulfilled the market demand.
According to statistics from the Beijing Municipal Bureau of State Land & Resources, Beijing supplied 579 hectares of land in total last year for supportive housing constructions.
Industry insiders analyzed that the large supply of supportive housing will surely pull down general housing prices. The average price of the developments around the supportive housing developments will be lowered by as much as 30 percent.
According to Pan Shiyi, market performance in the first few months of 2008 shows that the government's supportive housing policy has shown its effect on controlling housing prices of middle and low end commercial developments.
In China's metropolis Shanghai, the trade volume in the real estate market this February proved the same fact. "In this February, the trade volume of commercial housing lowered by 45 percent from the same period last year."
"Affected by the new policy of house loans, which was issued last year, many potential investors chose to watch the market for awhile. At the same time, the changing stock market and uncertainty about the appreciation of RMB made many investors aware of the possible risk in the real estate market. All these factors have affected the market performance." A real estate developer from southern China's Guangzhou city gave his analysis to the market.
Will the housing price drop or not? Beijing Vantone Real Estate Company, a pioneer developer, predicted in its yearly report of 2007 that prices for commercial housing in the capital city will maintain at a high level, but it won't rise dramatically in a short period of time.
Edited by CRIENGLISH.com
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