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Report: Domestic property market steady, but uncertainty still remains

Author  :  Wang Chunyan     Source  :    Chinese Social Sciences Today     2016-12-10

The 2016 Annual Report on the Development of Housing Market in China was released on Nov. 30 in Beijing.

Compiled by the National Academy of Economic Strategy at the Chinese Academy of Social Sciences, the report this year focuses on policies to cool China’s property market. The report suggests that China’s property market gradually entered a rising period from 2015 to 2016. The sale of commercial housing in the first four months of 2016 grew by about 39 percent, reaching the highest point seen since the beginning of 2015. And the figure in the first nine months of 2016 is about 27 percent, 20 percentage points higher than the average growth rate in 2015.

Generally speaking, property prices grew rapidly at first, and there was a slowdown later. The average sale price of property in the domestic market increased by about 18 percent in March 2016 and around 13 percent in September, according to the report. The report also said that the growth rate of investment in the property development slid dramatically in 2015, and picked up significantly in the early 2016.

Compared with previous growth of the property market, the latest trends show signs of regional overheating along with the general recovery of the property market, according to the report. Based on the national housing market risk-monitoring system, the report suggests that the risk of inflated valuation of property is commonly seen in all the 35 Chinese cities categorized as large and medium-sized cities. Both the growth rate and the accumulated risk in the hotspot cities has exceeded those in the period from 2009 to 2010, presenting a warning signal for the nation.

However, the report suggests the general risk nationwide is still under control. On the one hand, major indicators are still within the risk control benchmarks while there are also many regulatory tools and policies available. On the other hand, the current overheating is regional rather than nationwide, and it is unlikely that the current prosperity of the property market represents a long-term turning point.

The report also predicts a short adjustment phase of China’s property market in 2017. The overall housing price will steadily fall, and uncertainty still exists. Vigilance is advised about the potential for continued overheating due to insufficient adjustment, over-regulation and other situations that may result in market uncertainties.

Editor: Yu Hui

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