China's housing prices are expected to fall 10% on average in the coming two years with the highest drop reaching 30%, according to a recently-released research report by the Institute of International Finance of the Bank of China (BOC).
The report indicates that the domestic real estate market will shift from the current state of stagflation to a downturn as a result of cyclical factors. By 2010, the real estate market will re-enter the upturn stage.
At present, with the global and Chinese economy reaching its turning point, the economic growth has entered the descending stage of the cycle and the Chinese domestic real estate market has also begun to adjust and reconstruct itself, which will potentially increase the risks of personal loan defaults in local areas, according to the report.
It also estimates that the descending stage of the economic cycle will lead to shrinking credits, and the small-scale real estate companies with insufficient capital may be faced with possible capital chain ruptures leading to bank credit risks.
However, in the long run, with the constantly-increasing rate of urbanization, there is still huge potential in the domestic real estate market, said the report.
By People's Daily Online
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