Property developer confidence rises despite cooling market

China's property developer confidence index rose 0.05 points from September's 103.52 points in October, the first rebound after six months of decline, while the growth of housing prices is starting to slow down, according to the National Bureau of Statistics.

In October, new home prices in China's 70 large and medium sized cities rose 0.3 percent month on month, the growth rate was 0.2 percentage points lower than the previous month. The prices in 70 cities climbed 8.6 percent from a year earlier, slower than the 9.1 percent increase in September.

Policymakers in Beijing adopted a new round of cooling measures for the country's property market in September. The moves included a nationwide suspension of lending for third and subsequent home purchases as well as higher down-payment requirements for first-time buyers.

Analysts said that the property price increase may continue to slow for the rest of the year as the government is likely to further tighten its grip on the property market, which is faced with growing asset bubble risks caused by potential speculative capital from abroad.

Yang Hongyu, a senior analyst from Shanghai-based E-House China predicted that the growth rate for all of 2010 will be around 6 percent.

However, along with high property developer confidence, the year on year growth of real estate investment for the first 10 months of 2010 was 0.1 percentage points higher than that of the first 9 months.

Industrial experts believed that as the developers' financing sources are tightening, they are likely to lower prices to promote sales in the future.

Meanwhile, foreign capital utilized rose dramatically in October. A total of 8.7 billion yuan of foreign funds added to housing development investment in October, accounting for 16 percent of total foreign funds utilized in the first 10 months of 2010.

"Under the context of a stronger yuan, foreign investors are joining China's housing market," Yang said.

By People's Daily Online