Caixin
Nov 06, 2010 01:19 PM

【Caixin Summit】Property Market at a Turning Point, Says Xie

(Beijing) -- China's property market has reached a turning point and will begin a gradual decline for years, said financial analyst Andy Xie at the Caixin Summit in Beijing.

"The property market has reached its peak," said Xie, a board member at the firm Rosetta Stone Advisors. "Generally speaking, the government has been keeping money supply growth lower than theGDPgrowth this year, and the tightened currency supply will leave little room for housing prices to rise further."

Since April, the Chinese government has issued a series of policy measures to rein in the galloping housing prices, and the long-awaited property tax is expected to be launched in months. However, at panel discussion on the property market at the Caixin Summit, industry insiders said the tax may not be an effective salve to the market. 

Su Xin, president of Beijing-based Gaohe Investment said, "The property tax cannot solve the fundamental problem, policies related to restricting purchases will only result in future price hikes," said Su, adding that the current limitations on residential housing purchases will force capital to flow into the commercial housing sector in the next two years.

Lu Hang, vice chairman of Century 21 China Real Estate, also warned that although the property tax will help accelerate market transactions in the short term, the tax burden may finally be transferred to end buyers. "It needs the government to work out an effective design in the taxation system," said Lu.

According to Su, a rise in investment demand within the property market has pushed up China's housing prices since 2007, and only an increase in supply would ease prices.

Xu Chenggang, a finance professor at the University of Hong Kong, said, "The rise in housing prices lies in regulatory restrictions and inadequate land supply," said Xu.

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