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Published on : Jul 18, 2014

China is experiencing a decline in real estate prices currently. This is the result of a deliberate attempt by developers to increase the volume of sales by cost cutting. The city of Hangzhou has recorded the maximum decline in real estate prices amongst the other cities. The prices have consistently been declining since June 2012. However, the declines have not been very satisfactory and need to decline further in order to boost sales. 

The main problem area is that the housing inventories are too high. Real estate developers are being urged to control the rising housing inventories. China’s central bank is encouraging some of the prominent lending institutions to stimulate granting mortgages. Economic stability and relaxations of stiff restrictions can definitely stabilize the Chinese property market. Since March 2014, developers have been slashing prices with a view to attract more buyers. Out of about 40 Chinese cities, Hohhot was the first to relax home-purchase limitations. 

An analyst from Tebon Securities Co. has predicted that Chinese cities may relax several measures due to declining home prices, in the months to come. The real estate market in China is likely to perform better in the latter half of 2014 as compared to the former. 

The statistics bureau reported that home sales increased by a significant 33% in the month of June as compared to the preceding month. The Bureau of Statistics mainly considers the cities of Guangzhou, Shenzhen, Shanghai and Beijing to be the first tier cities.