5th May 2008- The Chinese property market has seen house prices in 70 large and mid-sized Chinese cities rise 11 percent year-on-year in the first quarter according to the National Development and Reform Commission (NDRC).
Prices of new apartments jumped 11.8 percent, down 0.4 percentage points from the same quarter last year, while prices of second-hand flats rose 11.5 percent, 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 percent increase in March. It was followed by Haikou and Ningbo, which saw property prices rose 18.3 percent and 18.2 percent, respectively.
The success of Chinese real estate prices has undoubtedly been overshadowed by the events surrounding the forthcoming Olympics in Beijing. Chinese real estate is not all good news for example prices of new homes in Shenzhen, a southern city bordering Hong Kong, and Nanjing, capital of east China’s Jiangsu Province, fell 4.9 percent and 0.8 percent, 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.
