China’s Property Prices May Decline Up to 10%, SouFun SaysPooja Thakur
China property prices may decline as much as 10 percent this year and the slump may extend into 2015, according to SouFun Holdings Ltd.
“Chinese property prices are seeing an adjustment after the rapid increase in the past two years,” Vincent Mo, founder of China’s biggest real estate information website, said in a Bloomberg Television interview with Haslinda Amin in Singapore yesterday. “Prices should stabilize by the middle of next year.”
China’s new-home prices fell in all but one city monitored by the government last month from August, the most since January 2011 when the way the date is compiled changed, as the easing of property curbs failed to stem a market downturn amid tight credit. Home sales slumped 11 percent in the first nine months, prompting the central bank to ease mortgage restrictions on Sept. 30.
All but five of the 46 cities that imposed limits on home ownership since 2010 have removed or relaxed such restrictions amid the property downturn that has dented local revenues from land sales.
The People’s Bank of China’s new rules give homeowners who have paid off their mortgages and want a second property the same advantages as first-time buyers, including a 30 percent minimum down payment, compared with at least 60 percent previously.
SouFun’s American depositary receipts have dropped 45 percent this year. The property website company, which covers more than 300 Chinese cities, is seeking to generate additional revenue from property transactions and financial services, Mo said.
“Today we are a traditional Internet portal collecting listing fees,” Mo said. “We are now trying to see if we can collect fees from the transactions. SouFun needs to do something new; we want to change the company from a purely Internet platform to also a transacting platform and a financial-services platform.”
China will support consumption in six industries including real estate development as growth in the world’s second-biggest economy slows, the State Council said after a meeting yesterday. The announcement is the first in recent years in which the central government officially declared direct support for the housing market, and may boost property shares, according to Credit Suisse Group AG.
“As long as China’s economy expands, the correction will be temporary,” Mo said. “The property market will probably have another hot cycle in one to two years.”