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China’s residential market to stay strong in 2017, says Citigroup

Don’t expect any tightening in liquidity, assures leading property research analyst

China’s housing market will remain strong next year according to Citigroup, despite reaching new highs in 2016 with the central government making moves to maintain market sentiment while clearing oversupply in smaller cities.

“Unsold stock will only be cut if home prices keep rising, so there’s no doubt the physical market will keep thriving in 2017,” said head of Asia-Pacific property at Citi Research Oscar Choi, reports South China Morning Post.

Property sales nationwide have increased by a record 40 percent so far this year, with land and home prices in the mainland’s first and second tier cities, such as Shanghai and Shenzhen scaling new heights.

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This led to speculation that liquidity in the market may soon be tightened to control the increases, but Choi rejects any chance of this. He said: “What I have seen is five or six banks sometimes chasing one developer to offer it financing services, after land purchases. That won’t happen if they receive any internal guidance from the central bank.”

Home prices in Shanghai have jumped 34 percent in the past year. Speculation over government plans to impost tightening measures sent property buyers into a panic buying spree in the last week of August, which saw transaction volumes soar by 93 percent.

This was despite Shanghai housing authorities denying the measures.

Ivan Ko, chairman of China Real Estate Chamber of Commerce Hong Kong and International Chapter, agreed with Citi’s views, saying that Beijing, Shanghai and Shenzhen are all international metropolises, which will remain attractive to global talent and investors, in turn fuellinig the housing market.

He added that despite home prices being high, he feels they are reasonable.

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Source: Property Report