MNI: China Property Mkt To Slow to 'Reasonable' Level: E-house

     BEIJING (MNI) - China's property market should slow to a more reasonable

level next year, E-House R&D Institute said in its annual report on the property

market Friday.

     The Shanghai-based property consultancy said in the 49-page report that the

Chinese government's controls on the sector would continue to weigh on growth.

     The 19th Communist Party Congress in October stressed that "houses are for

living in, not for speculating on" and pledged to improve the property system,

with more of a balance between housing sales and the rental market. 

     From a macroeconomic standpoint, the institute said that China would

maintain a monetary policy with a tight bias, but added that a high degree of

tightening is not likely due to the government's goal to both maintain stability

of economic growth and deleveraging.

     A tight monetary policy could weigh on momentum of the property sector by

dragging down sales and prices.

     As the central government clamps down on surging housing prices, more

measures could be rolled out in cities where property prices continue to edge

up, E-House said in the report, while in the second half of next year curbs

could be loosened in some cities where property transaction slumps lead to the

slowing of inventory reductions.

     --4% INVESTMENT GROWTH EXPECTED

     E-House predicted property investment growth would be 4% in 2018, which it

called a "neutral outcome." The moderate growth is due to aggressive land

acquisitions by property companies this year, it said, adding that a decrease in

housing starts would drag down further growth of investment.

     Housing starts are expected to dip 2% as property developers face financing

pressures, thus delaying construction projects, the report said. On the other

hand, developers may be more cautious in starting new projects under weaker

demand caused by property purchase restrictions, it said.

     Property sales are expected to drop by 7% year-on-year, E-House noted, with

all city tiers expecting to see property sales edge down under tight policies.

But E-House said the sales drop would not be that significant, given the 7.9%

sales growth in the first 11 months of this year. 

     Housing prices for 70 major Chinese, as monitored by the National Bureau of

Statistics, will continue to narrow and could turn negative in April, while

year-on-year growth could turn negative around August, E-House predicted.

--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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