China property prices decline further

November 29th, 2011 at 10:35 pm

China’s real estate market is starting to cool, with property sales falling 24 percent month-on-month in October and 14 percent over the same period last year.

Property developers struggling for funds suspended further land acquisitions and construction, which sent shock waves through the economy.

According to a Credit Suisse survey on construction companies, the primary concern in the coming months is delayed payments from developers. It added that construction projects have begun to fall.

Meanwhile, analysts see a 10 to 20 percent correction in prices in the next 12 months.

They believe that underlying demand remains strong and is backed by high savings rates and resilient income growth.

“I don’t expect the secondary market to be affected much,” said Kevin Tsang, an analyst from Moody’s.

“The government will try to make sure the impact remains moderate for developers.”