China Property Experts Mostly Positive About Market Outlook

     BEIJING (MNI) - Chinese property experts are mostly upbeat on the continued

growth of the sector and see housing price rises as a long-term trend, according

to the consensus view of an economic forum in Beijing.

     "I think entrepreneurs are positive about the property market, and the

public is also expecting housing prices to grow, which are both correct

judgements," Meng Xiaosu, president of China National Real Estate Development

Group Corporation, a major state-owned real estate company in China, said at the

Thursday forum that gathered economists to discuss discuss China's reforms and

its search for new growth engines.

     Meng said property developers are not concerned about the latest round of

policy controls on China's property market because they have seen such

restrictions implemented before, only to watch the property sector continue to

grow.

     The central government has guided local governments to issue policies to

rein in skyrocketing housing price growth in the country over the past few

years, but the local governments have tended to loosen the controls when the

policies started to have a negative influence on local economic growth, Meng

said. 

     The tightening/loosening cycle has occurred before, with increased property

sales and skyrocketing prices seen during loosening times, such as in Shenzhen,

where housing prices rose 50% last year.  

     Meng said the current slowdown of the property sector and housing prices is

a "fake phenomenon," which he termed "abnormal."

     Yang Xianling, head of the research department of Lianjia, one of China's

largest property agencies, rebutted assertions that housing prices in

differently tiered cities had diverged.

     "China's property market so far has never diverged," Yang said. "In the

past 30 years, there has only been one direction of the sector, which is

long-cyclical prosperity. Therefore housing prices could only grow and would not

drop."

     He pointed out that changes in China's property market were "highly linked"

and "highly transmitting," referring to the pricing spillover effect from

higher-tiered cities to lower-tiered cities.

     Yang also said the recent boom of the property market in Tier-3 and Tier-4

cities was an "artificial result" brought on by new controls on the sector.

     Li Tie, president and chief economist at the China Center for Urban

Development, a research and advisory institution to the National Development and

Reform Commission, also predicted that housing prices would continue to grow in

hotspot cities due to the unequal allocation of resources in the country.

     He said prices in Beijing will not drop because of the many "unique

resources" in the city.  

     Li also said the government should make greater efforts in developing towns

close to metropolitan areas by expanding resources and developing infrastructure

in such areas, and should also give smaller cities and towns more development

opportunities.

     Some experts at the forum, though, predicted a slowdown for the property

market. 

     Liu Shijin, former chairman of the Development Research Center of the State

Council, said the property sector overall is experiencing a decelerating trend.

The current investment growth is due to divergence between high-tiered and

low-tiered cities, and the former help boost overall growth, he added.

     "1%, 2% or 3% growth would be high numbers," he said. "In the future, zero

growth and negative growth will be normal, which is the major trend."

--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com

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