A Chinese government think tank has identified 35 major cities with over-valued property markets, saying they face more severe risks of falling home prices than seen in previous property boom cycles. Among the 35 major cities, China’s first-tier centres – Shenzhen, Shanghai, Beijing and Tianjin, and second-tier cities – Xiamen, Nanjing, Zhengzhou, Hefei, Shijiazhuang and Fuzhou were said to be the 10 cities most exposed to property market risks.
“Those over-valued property markets are highly likely to see a slowdown in price growth or even a downright price fall, for which we should be on high alert,” the think tank said.
The National Academy of Economic Strategy, a part of the the Chinese Academy of Social Sciences (CASS), warned in a report dated Nov.30 that an “overcorrecting” property market would drag on economic growth and impair financial stability. It said short-term housing policies should be improved to guide a property “soft landing”.
Home and residential land prices have soared in many parts of China this year, prompting authorities to impose a range of restrictions on buyers and curbs on developers’ ability to raise funds.
Shanghai and Tianjin, which were among a number of China’s first- and second-tier cities that adopted extensive tightening measures during the first week of October, introduced fresh curbs this week in what’s been dubbed the “third wave” of tightening measures.
The academy’s report said the risk of falling property prices was more severe than seen in 2010, the year before the market deflated in 2011 when the government introduced multiple curbs to tame soaring prices.
However, overall property risks at the national level were still “controllable”, it added, citing reasons such as the availability of “many tools” to adjust the market, without elaborating on specific options.
Ding Ruxi, a researcher at the academy, said value of assessing the 35 cities most at risk was well established. They include 23 provincial capitals, five municipalities, and a few other major centres.