China property prices could halve

Country:  China

14 April 2009

Property prices in China could fall by as much as 50% over the next two years, a top government researcher has projected, which is bad news for the country’s economy.

China’s booming economy has been largely reliant on property along with exports over the past decade and the decline in these two industries has had a negative impact.

Cao Jianhai, professor at the Chinese Academy of Social Sciences, a leading government think tank, said that a rebound in the property market was unrealistic.

He told the Financial Times he expected average urban residential property prices to fall by 40 to 50% over the next two years from their levels at the end of 2008.

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

Average urban residential property prices across 70 Chinese cities depreciated 1.3% in March from a year earlier but were up 0.2% from February, according to figures released yesterday by the National Bureau of Statistics.

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