reporter2
04-10-13, 19:07
http://www.businesstimes.com.sg/specials/property/china-property-bear-market-says-analyst-20131004
Published October 04, 2013
China property in bear market, says analyst
Independent analyst Andy Xie predicts that it will last for five years
By Mindy Tan [email protected]
[SINGAPORE] Even as new home prices in Chinese cities continue its upward trend, Andy Xie, an independent analyst and formerly Asia economist for Morgan Stanley, maintained that China has entered a property bear market - one that he predicts will last for five years.
"Earlier this year, there was a bounce . . . after a (price) correction, people on the sidelines will start buying because there is some pent-up demand. So you will see prices pop up again . . . but I don't think it's the start of a new trend as some people describe," said Dr Xie in an interview with BT.
This is despite official data in September showing that new home prices rose in 69 of 70 major cities in August. According to China's National Bureau of Statistics, price increases ranged from 2.3 per cent to 19.3 per cent.
According to Dr Xie, this momentary recovery is not sustainable as the money supply is not picking up. Indeed, Premier Li Keqiang had himself said that the Chinese government would not rely on macroeconomic adjustments such as increasing the fiscal deficit and loosening money supply when faced with downward pressure on the economy, pointed out Dr Xie.
Looking ahead, Dr Xie said that he expects prices to continue its downward trajectory, but "in waves".
However, Tier 1 cities will fare differently from Tier 2, Tier 3 and Tier 4 cities.
He expects that Tier 2 cities such as Chengdu and Chongqing may make a comeback.
"They have a big population base so when prices come down sufficiently, people may buy again. Tier 1 cities don't have to worry about demand, it's really about affordability," said Dr Xie.
"What I see is that when prices drop to two months' salary per square metre, you will see demand surge. Now, it's twice as expensive. So it will correct over the next five years - wages will rise a bit, and prices will come down a bit."
Dr Xie was speaking at the sidelines of a joint event held by the Economist Corporate Network and Raffles Quay Asset Management to talk about China's property market. His speech was titled: "China: Has the dragon lost its fire?"
Published October 04, 2013
China property in bear market, says analyst
Independent analyst Andy Xie predicts that it will last for five years
By Mindy Tan [email protected]
[SINGAPORE] Even as new home prices in Chinese cities continue its upward trend, Andy Xie, an independent analyst and formerly Asia economist for Morgan Stanley, maintained that China has entered a property bear market - one that he predicts will last for five years.
"Earlier this year, there was a bounce . . . after a (price) correction, people on the sidelines will start buying because there is some pent-up demand. So you will see prices pop up again . . . but I don't think it's the start of a new trend as some people describe," said Dr Xie in an interview with BT.
This is despite official data in September showing that new home prices rose in 69 of 70 major cities in August. According to China's National Bureau of Statistics, price increases ranged from 2.3 per cent to 19.3 per cent.
According to Dr Xie, this momentary recovery is not sustainable as the money supply is not picking up. Indeed, Premier Li Keqiang had himself said that the Chinese government would not rely on macroeconomic adjustments such as increasing the fiscal deficit and loosening money supply when faced with downward pressure on the economy, pointed out Dr Xie.
Looking ahead, Dr Xie said that he expects prices to continue its downward trajectory, but "in waves".
However, Tier 1 cities will fare differently from Tier 2, Tier 3 and Tier 4 cities.
He expects that Tier 2 cities such as Chengdu and Chongqing may make a comeback.
"They have a big population base so when prices come down sufficiently, people may buy again. Tier 1 cities don't have to worry about demand, it's really about affordability," said Dr Xie.
"What I see is that when prices drop to two months' salary per square metre, you will see demand surge. Now, it's twice as expensive. So it will correct over the next five years - wages will rise a bit, and prices will come down a bit."
Dr Xie was speaking at the sidelines of a joint event held by the Economist Corporate Network and Raffles Quay Asset Management to talk about China's property market. His speech was titled: "China: Has the dragon lost its fire?"