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Aarkstore Enterprise 2008-2009 Report on China's Property Market

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Aarkstore announce a new report " Aarkstore Enterprise 2008-2009 Report on China's Property Market" through its vast collection of market research report.

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									    Aarkstore Enterprise 2008-2009 Report on China's Property Market


 Although investment in property development and the completed building area
continued to increase in China in the first 10 months of 2008, the sales volume of both
the completed and uncompleted housing were dropping. According to National Bureau of
Statistics of China, RMB2,391.8bn were invested in real estate industry in China in the
first 10 months of 2008, up by 24.6% year-on-year; the building area under construction
2.48bn m2, up by 18.7% year-on-year; and the completed building area 310m m2, up by
9.1%. The sales volume of building area, however, dropped drastically, with only 450m
m2 being sold in the first 10 months of 2008, down by 16.5% year-on-year. On the other
hand, land market cooled as a whole. About half of the land was sold at bottom prices,
and 10% failed to be sold at auction in the first half of 2008.

Cyclical factors force China's property market to go down.

The downturn tells us that China's property market has entered in a cyclical adjustment
stage, and the situation would be worse in 2009. But the market is supposed to be in
upward cycle by 2010.

Supply would be sufficient in China property market in the next 2 years, and vacancy
rates rise.

1999 through the end of August 2008, basic balance was kept between supply and
demand in China's property market, with accumulatively 5.5bn m2 new commercial
building area under construction, 3.7bn m2 completed, and 3.74bn m2 sold. The
commercial building area that is under construction now is 1.76bn m2, and would be
available in the market in the next two years. Against such a downturn in the market,
there would be a period in which supply would exceed demand. Data showed that by the
end of August 2008 commercial housing of 130bn m2 was vacant, up by 8.7% year-on-
year. Of those vacant housing, residential ones account for 65.55m m2, up by 8.7% year-
on-year.

Actual demand would reduce because of macro-controls and credit shrinking.

Firstly, demand for investment would be greatly restrained.In September 2007, People's
Bank of China and China Banking Regulatory Commission jointly issued Notice on
Improving Management of Credit for Commercial Property, of which the provisions on
increasing mortgage rates and interest rates of loans for buying a second house achieved
obvious success in checking demand for investment, against the background of increased
investment cost and weak market.

Secondly, shrinking credit has resulted in dropping actual purchasing power of housing
buyers. Most housing buyers couldn't afford a house unless they get the support from
banks in the form of mortgage loans. That is to say, housing prices depend greatly on the
availability of bank loans. Now that the housing market is so weak and credit shrinking,
banks are worried about increasing credit risks and took the initiative to cut down
mortgage loans to housing buyers. On the other hand, buyers expect falling housing
prices, thus that they hoard cash and lose interest in mortgage loans. As a result, housing
prices couldn't rise anymore because of the shrinking supply of bank loans and dropping
demand of buyers for mortgage loans.


For more information please contact :

http://www.aarkstore.com/reports/2008-2009-Report-on-China-s-Property-Market-
63039.html

http://blogs.aarkstore.com/

From:Aarkstore Enterprise
Contact: Neel
Email: press@aarkstore.com
URL: www.aarkstore.com

								
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