News summaries

China’s house prices have risen at an unprecedented pace since 2009, most remarkably in cities such as Beijing (+77 per cent between January 2009 and August 2011), Shanghai (+129 per cent) and Shenzhen (+154 per cent). The market now seems to be at a turning point. In major cities, the number of housing transactions has dropped by about 50 per cent from the peak level and has remained low throughout 2011.

House prices have started to decline and inventory-to-sale ratios have more than doubled. In October, the weakening in the housing market seemed to have spread to smaller cities. This is triggering talks of a market collapse. So will house prices crash?

We do not think so. Just as we refute the claim of some economists that the house market boom in 2009-10 was “the biggest bubble in history”, we do not think the ongoing market corrections will evolve into a nationwide market collapse either.