| More property price cuts expected SHANGHAI -- Continued policy tightening, sagging sales and a looming cash flow crisis are likely to push Chinese property developers to slash their prices further. Under the repayment pressure, the debt-laden property developer Greentown China Holdings Ltd. sold stakes in five projects for 1. "The move will further suppress sales, promoting developers and used-home sellers to make deeper price cuts," said Shi Hongrui, managing director with Shanghai Hanyu Property. In January, home prices in the 70 major Chinese cities monitored by the National Bureau of Statistics all ceased rising due to the government's persistent cooling measures. 31 percent to 11. 1 yuan per share, and Greentown China down 2. Xue Jianxiong, an analyst with China Real Estate Information Corp. , said Chinese wage-earners face huge pressure from buying a house. Consumers felt less incentive to make purchases because home prices remained higher than most could afford. 56) per square meter. The move was there and then joined by many other big developers, including China Merchants, Vanke, China Resources and Greenland. 16 percent to 5. 9 yuan. "It will take a typical family of three in Shanghai, who together earn an annual income of 108,700 yuan, to work for 23 years plus 8 months and save all that money to afford a 2. Market insiders forecast up-to-20-percent drops in home prices across first-tier cities such as Beijing and Shanghai over next six to 12 months. 36 billion yuan of the same period last year. Property shares closed lower on Feb 29 following Shanghai's statement, with Poly Real Estate down 3. These measures included tight credits, a third-home purchase ban, higher downpayments and property tax trials. "The biggest crisis for real estate developers will be about their debts this year," said Chen Jinsong, chairman with Shenzhen World Union Properties Consultancy, noting that developers may face profit-losing and even bankruptcy risks if home prices fall over 20 percent. The act, as well as recent two call-offs on a bailout plan in eastern city of Wuhu and a similar policy in southern city of Foshan, showed the government's determination in steering the market to back to normalcy. 8 billion yuan of real estate trust in total will mature this year, with 50. 4 billion yuan due in July, the peak amount of the year. The nation started adopting measures to rein in the runaway market in 2010. According to a survey released by Credit Suisse Research Institute, its index reflecting respondents' willingness to purchase property over next two years dropped to 16 percent in 2011 from 22 percent in 2010. Shrinking sales have also worsened the cash flow for capital-thirsty property developers, as the country tightened money supply to mop up liquidity. China's central bank hiked the benchmark interest rates three times and banks' reserve requirement ratio six times last year. Data from Guotai Junan Securities showed 175. |
Thursday 1 March 2012
More property price cuts expected
