Worries reasonable, housing price tumble unlikely

Unlikely tumble

Whether the statements were real or not, Vanke and governmental officials did not hesitate to explain and calm the reactions to rumors of a slump.

Yu Liang, president of Vanke, explained the rumor incident during an interview with Leju, a housing service online-to-online platform, saying that the company held a "prudent and optimistic" attitude toward the industry.

"Mao was trying to remind about market risks amid industry declines," Yu said. "The sense of risk should be enhanced among real estate companies and related investors."

He said the gaps between housing sales in different cities were widening, but would be eased under the nationwide declines in housing industry growth.

"Confidence should be had in the industry as China's urbanization process still offers vast development space for real estate businesses," Yu said.

Zhu Zhongyi, vice president of China Real Estate Association, said that individual cases of housing price declines did not indicate an overall real estate slump.

Zhu said that a home price tumble is unlikely in first tier cities, as demand still exceeds supply, though occasional price cuts for certain buildings are inevitable and natural.

Many cities, including Beijing, have set restrictions on home purchases, including higher down payment ratios and imposing caps on the number of apartments a family can buy.

In metropolises such as Beijing and Shanghai, home prices have been growing at a slower pace this year, while many second- and third-tier cities are experiencing property price declines.

Chinese people's expectations about home prices seem to be changing, and more are taking a wait-and-see approach amid reports of price cuts for new housing projects.

Large cities should persist in strict credit policies as real estate fever lingers, but supports should be provided for first-time home buyers and cities with tightened supply, Zhu added.

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