Housing prices could fall up to 10 percent from current levels in major cities over the next 12 months, according to a report from a credit-rating agency released Monday.- z. n6 y d* U- T
Government measures adopted to cool the market and the abundance of new properties for sale could lead to a decline of as much as 10 percent in real estate prices in the coming year, said the Standard & Poor's Ratings Services report.
6 }! I. s+ l& i( P If the economy slows down significantly and interest rates rise sharply, home prices may even tumble 20 percent, the report said.
" `8 v5 I, w( E* | "Some developers may face capital shortages in the fourth quarter, but they still could handle it if they cut prices," Li Guoyi, analyst with Standard & Poor's Ratings Services, told the Global Times Monday.
6 N& |. w; F8 [/ S Developers are currently in a better position than they were in 2008, when prices dropped dramatically and capital dried up, according to the agency.5 M& V; z2 z& ~. h: t' O$ [
Many real-estate firms have adequate liquidity and have already locked in most of their revenue for 2010, reducing some of the financing pressure, the agency said.
|0 e6 I% A c "In April and May as the central government began tightening housing policies, some developers sold apartments at discounts, and then their sales volume rebounded," Li said." Z; I' F# R+ w
The government tightened property policies in April, and the impact was almost immediate.! y4 G% y+ X0 a" g0 J
Transaction volumes and prices dipped in major cities over the following two months, the first slowdown after almost a year of high-flying prices.
) z+ N! |: \7 C6 m" i Some developers also held back project launches after the government's policy an-nouncements, exacerbating the decrease in transaction volumes, the agency said.' s% i& m* \# J
But in August and September, many companies reported solid sales growth. China's largest listed property developer Vanke posted record sales of 14.2 billion yuan ($2.11 billion) last month, up 160 percent from a year ago.9 e5 j6 A/ n! i/ ^: C' S
In reaction to the rebound, the central government recently strengthened enforce-ment of real-estate policies already on the books since April and increased down payment requirements for first homebuyers to 30 percent. |