More Chinese expect house prices to fall

The last month have seen some large and dramatic changes in China’s property market. A wave of real estate agency closures in Beijing and Shenzhen and falling prices has many Chinese believing the real estate market has reached all time highs and is now finally correcting. Recent weeks have seen numerous reports of angry buyers storming property developer show rooms, after some developers were forced to drop prices as much as 20 to 30 percent to shift ever rising inventory.

According to New Tang Dynasty Television, turnover of existing homes in Shenzhen fell to 2,000 last month, down 80 percent over the the same time last year and has caused agencies to close due to the dramatic drop in sales. Beijing News said there is now 120,000 unsold properties on the market in Beijing. Home Link China published a report showing 177 real estate agencies have closed in Beijing in October.

China’s Premier Wen Jiabao said China is targeting a “reasonable correction” in the property market, indicating he won’t be relaxing measures designed to cool speculation in China’s property market. According to a Credit Suisse survey conducted in October of 200 Chinese residents, 53 percent of respondents believe property prices to fall. The same question asked in June, July August and September returned results of 14, 12, 14 and 18 percent respectively showing a dramatic shift in future expectations for property prices in the country.

In Australia, The Australian Newspaper has picked up on China’s problems citing comments from analysts that a downturn in China’s property market could have knock of effects for commodities. Yao Wei, a China economist at Societe Generale said “On the global economy, the biggest impact would be on the commodity sector.”

China turned to fixed asset investment such as building apartment buildings, office towers and under utilised roads after the Global Financial Crisis caused demand for its manufactured products to diminish almost overnight. Since then, property has been seen as a pillar of the China economy. If China’s insatiable demand for commodities come off the boil, then Australia could experience a single speed economy – slow, very slow.

» China property dip may have global effect – The Australian, 13th November 2011.
» In One Month, There’s Been A Major Shift In The Chinese Property Market – Business Insider, 12th November 2011.
» The Waning of China’s Real Estate Industry – China Forbidden News, 8th November 2011.


  1. I was talking to someone on the weekend who works at a very well-known Australian Mining Company and I asked them whether the company was worried about China? The answer was no because the company is seeing growing demand from India.

  2. I would have thought asking a mining company about commodity demand would be like asking a real estate agent if they thought property prices would correct.

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