Developers expect house market to stabilize

Leaders of China's real estate sector expect the housing market to stabilize, with prices in big cities rising more slowly and those in smaller ones starting "adjustment." Speaking to Xinhua on the sidelines of the China Development Forum, chairs of three of China's largest property developers agreed the housing market might need a rest. Feng Lun of Beijing's Vantone Group likened property developers to alcoholics. "The developers pursue exorbitant profits just like the drinkers get thirsty for the happiness and excitement of drinking. If they forget how much they can safely drink, it is easy for them to get drunk," Feng said. "As competition intensifies, more and more firms are aware of the harm drinking too much causes and start to get cautious." "It is not good to drink too much at one time. What is more important is to safely maintain healthy habits. It seems most Chinese developers are starting to think this way," Feng added. Zhang Yuliang from Shanghai's Greenland Group said the housing market, especially in the big cities, maybe need to "have a rest". "Prices in first-tier cities are stabilizing, but the rising trend is likely to stay," Zhang added. Zhang used an analogy of his own, likening the housing market in big cities to a man climbing a hill. "After climbing to a high point, he feels exhausted, has to slow down and need to have two deep breath, which is good for his health." Echoing Zhang, Song Lin of Shenzhen's China Resources (Holdings), expects housing prices in big cities to stabilize but continue to rise. The driving forces for house price rises are different in the first-tier cities, such as Beijing, Shanghai and Guangzhou, Song said. "There is still room for prices to rise in big cities while property prices in smaller cities, I guess, have entered a stage of adjustment," Song added. While there have been many predictions of a burst of the property bubble, all three were upbeat about the future. "The housing market has already arrived at a new starting point for sustainable and healthy development," Feng said. "Just like today's sunny weather, we should have confidence in the housing market's future," Feng added. Zhang made more specific forecasts, expecting the property market to remain sound for the next five to eight years, boosted by urbanization and regulation. The rosy picture was painted just days after official data showed more signs of a cooling housing market. Home prices in major cities grew at a slower pace in February, with fewer seeing month-on-month rises. Last month, new home prices in 70 major cities rose by an average of 11.1 percent year on year, slowing by 1.3 percentage points from January, while those for existing homes rose 6.4 percent, compared with an average growth of 7.4 percent in January.