China real estate brokers face slowdown
Updated: 2008-01-21 13:37
Realtors say the slowdown started in the autumn. But for reasons such as land supply and property hoarding by developers, the impact hasn't been seen yet in prices.
So far, there are no signs of a mortgage meltdown in China similar to that seen in the US, and experts don't foresee property prices falling substantially. Strong economic growth and surging demand from upwardly mobile families are supporting demand, especially for newly built housing.
But business is slowing, especially for the so-called "second-hand" apartments that are the lifeblood of local realtors in this newly commercialized market.
"In 2008, we think property developers will face some liquidity problems and financing issues," Matthew Kong of ratings agency Fitch Asia Corporates said in a teleconference briefing Friday.
In November, Shenzhen-based Zhongtian Real Estate closed down amid reports its CEO had gone into hiding. Last month, Shenzhen-based Changhe Real Estate and Beijing-based Xinyitian closed dozens of branches.
Until a decade ago, China's housing was mainly owned by the government and by state companies, and leased to workers at nominal rates. Since then, the state has sold most of those apartments to their occupants at subsidized rates, privatizing the market and creating a new class of home owners.
The property market took off after 2000. For more than three years, authorities have been trying to cool the market by raising taxes and tightening restrictions on sales of residential property.
"They don't want the bubble to suddenly go bust," said Fitch's Kong. "The government is determined to stop that trend."
The main target has been speculative property trading, or flipping, mainly by well-off locals and outside investors from other provinces including Taiwan.
The crackdown also may be aimed at curbing rampant fraud in housing lending, reports suggest.
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