2010-08-06 10:36

GUANGZHOU - The government is unlikely to come out with more tightening policies for the real estate sector in the second half, and is more inclined to allow the market to play a lead role in adjusting prices, a top industry think-tank expert said on Thursday.

"The price growth in key cities has declined and property sales have plummeted. So there is little possibility that the government will launch more tightening policies for the real estate sector before the end of the year," Zhu Zhongyi, vice-chairman of the China Real Estate Association, said at a forum organized by China Minsheng Banking Corp in Guangzhou.

Property prices in 70 major Chinese cities dropped 0.1 percent in June from the previous month, the second monthly slowdown after the record expansion in April this year, according to the National Bureau of Statistics.

The year-on-year increase slowed to 11.4 percent last month, compared with 12.4 percent in May and 12.8 percent in April.

But with China's gross domestic product growth not expected to exceed 8 percent this year and little chances of a double-dip, the government is unlikely to loosen the existing tightening policies, Zhu said. "With the existing tightening policies in place, the market could play a bigger role in adjusting the prices," he said.

Ren Zhiqiang, the outspoken chairman of Beijing Huayuan Real Estate Co, said housing supplies are likely to increase by 50 percent this year, thus putting pressure on property developers to cut prices.

"Since most of the developers have failed to meet their sales target set at the beginning of this year, they will have to launch more products or cut prices to stimulate sales in the remaining five months," Ren said.

But Li Silian, chairman of Guangzhou-based R&F Properties, feels that property prices may drop by another 10 percent in the second-half, as transaction volumes have picked up in July after realtors cut prices by 10 to 15 percent.

"Purchasing power has returned to the market again, at a pace much faster than we expected," he said.

Though no restrictive policies are on the anvil, a property tax will probably be launched during the 12th Five-year Plan period (2011-15), said Zhu.

According to the association's research, nearly 6 million units of commercial residential housing and 5 million units of affordable and low-rent housing will be built each year during the 12th Five-Year plan.