Property market slowdown likely to continue

More price cuts, discounts expected as sales slide

China's property market is facing downward pressure which will last at least six months, with more price cuts and promotions in coming months as real estate developers struggle to meet their sales targets, analysts said Sunday.

"Property sales, and newly started housing construction have continued to fall since March. Previously, the weakness in the property market had only appeared shortly in 2008 and 2010," Hui Jianqiang, head of research at Shanghai-based E-house China Research and Development Institute, told the Global Times Sunday.

The property market is confronted with a period of adjustment which will last more than six months, Hui said.

Property sales dropped 8.5 percent in the first five months of the year in terms of value from a year earlier, 0.7 percentage points higher than a fall in the first four months, the National Bureau of Statistics (NBS) said Friday.

The NBS is due to release the property price data on Wednesday, which is likely to show that housing prices continued to fall in May from the previous month, according to analysts.

"May is traditionally the best month for property sales but this year the condition was quite different. Based on the data we have gathered so far, sales have not recovered in June," Zhang Haiqing, director of Centaline Property Research Center in Shanghai, told the Global Times Sunday.

With weak sales and high inventories, developers will be forced to offer rebates and cut prices to boost home sales in the coming months, Zhang said.

According to a research report released by real estate brokerage Homelink on Friday, 23 major real estate developers which had announced their annual sales targets earlier, only achieved 33.4 percent of their sales targets in the first five months of this year.

"Developers are facing increasing pressure to achieve their annual sales target," Zhang Xu, another analyst at Homelink, told the Global Times Sunday.

"On policy side, the central government is unlikely to roll out measures to boost the property market by increasing investment although property investment directly accounted for between 5 and 10 percent of the GDP," Hui said.

"With side effects still not completely dissolved, policymakers will not resort to old measures by rolling out stimulus," Hui said.

Feng Jun, chief economist at the Ministry of Housing and Urban-Rural Development, said early this month that the slowdown in the country's property sector is a result of normal market-oriented adjustment and the government will continue to curb speculation in property market.