China urban residential market to ‘collapse’ next year

A professor at Chinese government think tank, the Chinese Academy of Social Sciences, says urban residential property values are likely to fall by as much as 50 percent over the next two years.

Urban residential property prices in China are likely to “collapse” by as much as 50 percent over the next two years from pricing levels recorded in 2008, according to a Chinese government think tank.

In an interview with the Financial Times, Cao Jianhai, professor at the Chinese Academy of Social Sciences, said that despite a recent “apparent rebound” in the residential property market in the medium term, prices would halve over the next two years.

He said: “Prices may not fall in the near term but I expect a collapse starting next year, followed by many years of stagnation.”

Figures released by China’s National Bureau of Statistics revealed that the average value of an urban house across 70 cities fell 1.3 percent in March from a year earlier. However, they were 0.2 percent up from February, breaking seven months of sequential decline.

Real estate agents in Shanghai have reported signs that the market appeared to have bottomed out, but Jianhai said any recent bounce was fuelled largely by increased liquidity and fraudulent activity and not by demand from investors.