Housing prices may rise 20-30% next year: economist
Published: Dec 28, 2009 02:11 PM Updated: May 25, 2011 01:12 PM

Visitors view models of apartment buildings in a real estate fair in Jinan, capital of east China's Shandong Province, on April 5, 2008. (Xinhua/Fan Changguo)

Although the property market is not healthy enough, there is no problem for housing prices to rise another 20 to 30 percent due to the Chinese government's moderately loose monetary policy planned for next year, an economist said Saturday.

Wang Xiaoguang, an economist from the Academy of Macroeconomic Research (AMR) of the National Development and Reform Commission said at a forum in Nanjing, Jiangsu Province.

In the past five years, 40 percent of wealthy people purchased 85 percent of the houses in the whole country. Among the 40 percent, 10 percent of the mot wealthiest people bought 50 percent of the houses in the nation. And the remaining 60 percent of people own15 percent of the total homes in China, Wang said.

The figures above obviously showed that the property market did not develop in a healthy manner, Wang pointed out.

"But I do not think that next year's housing prices will decline; there is no problem for prices to increase 20 to 30 percent," he said.

He explained that the most influential factor for the housing prices of next year is hot money. China loaned out 9.5 trillion yuan ($1.39 trillion) in 2009, of which 4 trillion yuan flowed into the property market, which explains the rising housing prices in the past year.

China plans to loan out about 7.5 trillion yuan in 2010, and the money policy is very loose, so the housing prices are expected to rise in next year, he added.

Also, the current property market is unhealthy due to hot money and market speculation, Wang pointed out, adding that a market adjustment is necessary to ensure the true growth of the property market.

Wang says the recent adjustments the Chinese government launched in the property market were not effective enough, and the bubble may burst in 2011 or 2012.

China's current economic recovery was due to the stimulus package, not the market itself, he pointed out.

Also, the economic situation for China will improve, but will not develop in a V-shaped recovery, but likely to go in a W-shaped one.

In a V-shaped recession, the economy suffers a sharp but brief period of economic decline with a clearly defined trough, followed by a strong recovery.

However, in a W-shaped recession, also known as "double-dip" recession, occurs when the economy has a recession, emerges from the recession with a short period of growth, but quickly falls back into recession.

Agencies and Li Na contributed to the story


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