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Slower home price growth here to stay

2014-12-22 09:39 Global Times Web Editor: Qin Dexing
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Several of China's real estate tycoons have taken a bearish view recently on the country's softening housing market. Even Ren Zhiqiang, a property mogul known for his controversial comments about housing prices, has said that nothing can now stop the market from falling.

These tycoons may have good reason to be pessimistic. With loosened restrictions on home purchases and mortgages, as well as recent interest rate cuts, land and home sales in many parts of the country have started to recover; yet prices will never skyrocket again as they did in years past.

Housing prices in third- and fourth-tier cities have limited room to rise now that populations in these locales have more or less peaked. Many of these lower-tier cities also lack the industries needed to support local economic activity and employment.

How to digest housing inventories will become a big question for developers. At present, Chinese developers are sitting on some 600 million square meters of unsold property, a record high.

After years of macro-controls, the real estate market will not be able to replicate its previous bullish performance. Instead, we can expect a steady correction over the years to come.

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