High-end housing prices to slump in three years
21/7/2003 14:31
Housing prices in Shanghai will continue to soar this year, with
prices of many new property projects increasing by 500 yuan (US$60) per square
meter from a year before, while the high-end housing prices are likely to slump
in the coming three years, the Youth Post reported today.
The average
pre-sold housing prices reached 4,803 yuan in Shanghai last year, and increased
to 5,158 yuan in the first quarter of this year, with pre-sold housing index
growing rapidly over the past two years.
More than 70 percent of some local
small housing units are purchased for investment purposes, with nearly half of
buyers expatriates or people from outside the city, according to
statistics.
The growing number of property investment has added bubbles for
the local real estate market, with more unoccupied housing and growing
proportion for new housing leasing and transference in the city, said an
industry analyst.
Excessive investment and speculation lies in the local real
estate industry, said Xie Guozhong, general manager with Morgan Stanley's Asian
region. "Shanghai's property prices should be based on the purchasing power of
local residents," Xie said.
According to a survey, more than half of the new
housing properties offered on the local market last month were priced more than
7,000 yuan per square meter.
The State Council will issue measures soon to
deal with excessive investments in real estate, car and steel industries, with
the average local housing prices expected to drop in the coming several years.
Shanghai will also raise land supply outside the city's Outer-Ring-Road, to
curb property price increase.
The local real estate market needs a
regulation period so that it can maintain a healthy development by 2010, the
analyst said.
However, the government policy will have a slow effect on
housing prices in a short run, so local property prices are expected to drop in
two or three years, he said.
The property price drop will be useful to
eliminate the bubbles in the local real estate market, he
added.
Wendy Zhang/ Shanghai Daily news
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