China House Price Index expected to turn negative before May

The China Daily has reported comments from Yang Hongxu, a senior researcher at E-House China Research and Development Institute in Shanghai saying he believes China’s House Price Index, based on the 70 major cities, will show a decline in prices before May, following evidence of a slowdown in February’s data.

Statistics from real estate adviser DTZ show house sales in first tier cities have plunged 64.6 percent in the month of February, and second tier cities have seen a 18 percent reduction in sales. Beijing Real Estate agents have told the China Daily that house price growth has been dampened, while ‘industry insiders’ also say property prices will begin falling in the coming months.

The falls stem from a range of tightening measures put in place by the central government to try to gain control of its rampant and overheating property market. The latest move comes today with new regulation preventing agents from using false or non-standard price labels to mislead property buyers.

On Sunday, the SBS aired a story about China’s vast empty cities, built primary to keep GDP ticking along after world demand for Chinese made product collapsed as a result of the Global Financial Crisis. The program showed the deserted CBD of Zheng Zhou’s at 11am on a Thursday, the empty South China Mall which when built was the largest shopping centre in the world and a newly built (but empty) city of Daya Bay, designed for 12 million people.

Gillem Tulloch, a Hong Kong based analyst said “It’s essentially the modern equivalent of building pyramids. It doesn’t really add to the betterment of lives, but it adds to the growth of GDP.”

The SBS Dateline report can be watched online here and gives a good insight to what is driving Australia’s 1 in 100 year mining boom.

» China’s Ghost Cities – SBS Dateline, 20th March 2011.
» Property prices to begin a downward trend – The China Daily, 23rd March 2011.
» China orders honesty in property market – The Sydney Morning Herald, 23rd March 2011.
» Economic slowdown in China likely in second-half of 2011, banker says – The Australian, 22nd March 2011.
» China gets set to pop speculative housing bubble in 2010 – Who Crashed the Economy, 13th December 2009.


  1. Australia’s property bubble depends on China, and China is experiencing a real estate bubble bigger than any in the world, apart from Australia! By all measures (price/rent, price/income, dwellings/population) Australia’s bubble is on a larger scale and even less sustainable that the China bubble! Like Australia, China is investing in pointless excessive infrastructure that nobody needs, including the huge oversupply of houses in Australia as demonstrated on China is responsible for most recent global demand for commodities so when their bubble pops, Australia is doomed! China’s collapse will seriously affect Australia and other countries benefitting from China demand. Coal and iron prices will plummet along with oil and other commodities. China’s dramatic growth won’t go on forever. Most people must realise by now Australia has an unsure future. Nobody knows exactly when the collapse will happen but there’s no doubt it will happen sometime and the longer this bubble expands the worse the crash will be. China saved Australia during the GFC but when they fall over the effect on Australia will be devastating. History teaches us that diminishing resources and increasing demand always leads to disaster. China needs our resources and they might do whatever they can to secure them, even if it means war.

    Abdul Kalam
    Australian Property, Economy and Politics Forum

  2. As I have said on this blog and many others. It is only a matter of time for China, Australia, Brazil, Canada and other countries who think they have missed the GFC will go through what everyone else is going through. The funny thing is even if all the countries stimulate their economies again they will eventually have to face the music. My belief is China is just another Japan 80’s style economy that is going to pop one day. Jim Chanos, Hugh Hendry and other bears dont make the big money because they are stupid but because they know a good short opportunity when they see it. There is not anyone in this world that can convience me that all those empty houses/units, building, roads etc in China is good for their economy. I will never believe that. Alot of people are going to lose alot of money on China when it is all said and done.


  3. One good thing about this SBS video that I watched is it is about time the Australia media starts recgonize that all is not well in China.

  4. @LBS. The media is very careful at what it dishes out these days especially when it comes to property. Australian property doesn’t need outside influences like China to start falling in value. It is happening already especially in Perth, Adelaide and Melbourne. All thats required for house prices to fall is for people to think house prices will fall – simple as that!

    The media will always look at the positive because if they mention the truth and people start to catch on, then prices will start tumbling without outside influences.

  5. Domenic,

    What I am saying is that prices are falling now and it is hampering people but it wont really start to fall until the commodity boom turns into a bust. The only way that will happen is when China slows or goes down. There is a bit of pop now but nothin like what will happen when China goes down. Until then it will just be a trickle here in Australia.


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