Turning point for property market ahead

The volume of property transactions in major cities of China has been dropping since the beginning of this year, as a result of the tightening tax, financial and land policies released by the central government. However, some industry practitioners have warned that the turning point of the real estate sector has not yet come. Home buyers say it may not be a good sign for property speculators.

Since the beginning of the year, the property transaction volumes in the major cities such as Beijing, Shanghai and Guangzhou have been dropping. For example, in Beijing, more than 300 units of new housing were sold in January. The number for pre-owned housing was also around 300. Data shows that in comparison, more than 1,000 units of such housing were sold in December.
 
Li Wenjie, Deputy Chairman of Beijing Real Estate Agency Association, said, "Many people think the property market has seen a sharp decline. But the transaction volume of 300 units is still higher than those in the same periods of the previous three years."

Xie Juan, Deputy Chairwoman of Wuhan Pre-owned Property Association, said, "The period between January and the Spring Festival is typically a low season for us. So the transaction volume has been decreasing obviously since December."

To curb soaring housing prices in China, the Ministry of Housing and Urban-Rural Construction says a total of six million units of social welfare housing will begin construction this year. Sources say the measure will weaken the demand for commercial housing in China. But some say that despite this, the property market will still not see a turning point.

Li Wenjie, Deputy Chairman of Beijing Real Estate Agency Association, said, "I think the property market will not see a turning point. And I suppose the sales and demand will be strong this year. However, a structural adjustment will probably occur. For example, some home buyers will turn to social welfare housing instead of commercial housing as the investment in social welfare housing is raised across the country. And there won't be an another blow - out increase which happened last year."

Potential home buyers say the dropping property transaction volume is not good for property speculators.

A Wuhan local resident said, "The central government's tightening policies may not be good news for the property speculators in 2010."

The Beijing municipal government says it plans to begin construction on a total of 134 thousand units of social welfare housing this year. As a matter of fact, the number is only a little bit lower than  the 178 thousand units of the commercial housing sold in 2009 in Beijing.