Burgeoning supply and slumping demand will put “very large" pressure on home prices for the rest of the year, according to China’s central bank.
The opinions came in a commentary published in the latest edition of China Finance, a central bank publication, China Daily reported.
The government’s attempts to limit property speculation, including efforts to tighten lending, have had "initial" impact, wrote Zhou Jiang of the housing ministry's research center. And more results will show themselves before year-end, he maintains.
Price drops will be "relatively large” in bubble cities, Zhou wrote, without naming them.
Already, Chinese land prices gained only 1.52 percent in the second quarter from the first, according to the China Land Surveying and Planning Institute.
Many experts have turned bearish on China. One of them is Hugh Hendry, head of hedge fund firm Eclectica Asset Management.
In an interview with The New York Times, he compares China to Starbucks: good at growing fast, but not at creating wealth.
“The idea is that things would happen today that are commonly thought of as impossible, most notably a significant reversal of China,” Hendry said.
Home prices already have begun to tank, says Harvard economist Ken Rogoff.
“You’re starting to see that collapse in property and it’s going to hit the banking system,” he told Bloomberg. “At the speed (the economy) is growing, it’s going to have bumps.”
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