Property prices set to rise as supply tightens

Updated: 2013-01-30 09:20

By Hu Yuanyuan (China Daily)

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Yang Zhen, a 26-year-old company executive, for instance, said he's hoping to snap up a small apartment in the capital before returning home for Spring Festival.

"In April last year, one of my colleagues bought a one-bedroom apartment at a cost of around 1.3 million yuan ($208,700).

"But I couldn't find a similar one for any cost less than 1.8 million yuan now. I just couldn't wait anymore," he said.

Property prices set to rise as supply tightens

Industry figures show that the average price for pre-owned homes in Beijing have hit 30,803 yuan per square meter in January, up 36 percent on a yearly basis.

"But if prices continue to go up greatly, transactions may drop," added Zhang from Century 21st.

Thomas Lam, director and head of research, greater China, at the international real estate firm Knight Frank, said he expected home sales in Beijing to fall in the first quarter of 2013 as Chinese New Year is traditionally a slow season.

"However, due to the overall market recovery in 2012, home prices could continue to grow moderately with steady investment returns," he added.

In a report released on Tuesday, Moody's Investors Service said that despite expecting a growth in the sales by most mainland property companies in the first quarter of 2013, it does not expect prices to increase sharply across the board in the near-to-medium term.

Among the 44 cities where prices have risen, none has recorded growth of more than 5 percent year-on-year, it reported.

"In addition, developers continue to focus on mass-market housing, which entails lower average selling prices, rather than on luxury homes. The increased proportion of mass-market housing will also restrict the increase in prices," Moody's said.

Kaven Tsang, a vice-president and senior analyst at Moody's, added that the credit profiles of many of its rated developers had improved because of their sales growth and better liquidity positions.

"Since November 2012, Moody's has taken nine positive rating actions and only one negative action in its rated portfolio," said Tsang.

"The number of companies with negative rating outlooks fell to 9 as of Jan 25, from 12 at end-2012 and the peak of 17 in May 2012."

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