Source: CCTV.com

08-31-2008 11:04

Property sales and real estate investment in China continue to dwindle. Now some experts expect the situation will last longer than expected, with some smaller developers folding altogether. Here's LIU WENWEI.

Property sales and real estate investment in China continue  to dwindle.

China's top economic planner says, sales of commercial homes totaled 277 million square meters nationwide in the first 7 months this year. The number is down nearly 11 percent from last year. And the growth rate is 37.2 percentage points lower than a year ago.

The amount of completed residential or existing homes are down 18 percent, in terms of area, from a year ago. And the number of pre-sale residential homes is down nearly 8 percent.

"The shrinking sales show that macro-control measures are actually working. Some people also believe prices will drop further. And some elements in the market have also kept some investors away."

Nie Meisheng,Chairwoman China Real Estate Chamber of Commerce,said,"China's property sector is experiencing typical 'stagflation' at the monument. Trading is declining, which also drags down investment. While real overall housing prices in the country are actually growing."

Property investment has also slowed in China since the middle of the year. Figures from the National Development and Reform Commission show that during the first 7 months this year, Chinese developers bought 5 percent more land use right, year on year. But the growth rate declined 6.7 percentage points from a year ago. Land use right purchases in July alone dipped by 28 percent.

Nie Meisheng,Chairwoman China Real Estate Chamber of Commerce,said,"Developers are very cautious now when taking land use right. One of the reasons is they have no clues as to what the market will look like in 2009. Another reason is that it will take them more time to balance their cash flows."

Analysts also point out that developers are not willing to hold any land inventories in hand. While tightening credit policies and market uncertainties have also helped keep market supplies low. The amount of completed and nearly constructed properties in July both plummeted by 35.7 percent, in terms of area, from June.

Experts believe the market readjustment could last longer than expected. And it will eliminate small and inefficient developers this time around.