First-tier cities such as Beijing and Shanghai will continue to lead the growth in residential property prices in China in the coming years, while second- and third-tier cities might see a relatively flat market amid high unsold inventory, according to global real estate consultancy DTZ.
“Second- and third-tier cities have high unsold inventory, which would put a lid on future price increase,” Alan Chiang, DTZ’s Great China head for residential property, said at a media briefing in Hong Kong on Monday.
Changsha, for instance, may take eleven-and-a half months to absorb its current unsold stock, going by its present sales rate, while Wuhan will need a little over ten months to absorb its inventory, he said.
New home prices in first-tier cities rose 10.9 percent to 20,977 yuan (US$3,422) per square meter in 2013 from the previous year, according to DTZ data. In contrast, prices in second-tier cities have only climbed 4.6 percent to 8,120 yuan per square meter in the same period.
China’s new leaders have indicated a more hands-off approach towards residential property compared to the previous government, Liang noted. The new government will focus on ramping up supply of affordable housing while letting market forces determine the prospects of the commercial housing market, he said.
Provincial capitals, meanwhile, will benefit most from the government’s efforts to build regional city clusters as part of the urbanization drive, Liang said.
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