Property Markets to Stabilize under New Property Law

Real estate experts at Vigers Asia Pacific have said in a recent report that property markets in China have shown signs of slowing down as a result of…

Real estate experts at Vigers Asia Pacific have said in a recent report that property markets in China have shown signs of slowing down as a result of measures to cool down real estate growth. Government initiatives, as implemented since 2004, have restricted property supply, but not demand.

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Vigers expects property markets in China to move towards a pattern of stabilized growth in the future, as fears and uncertainties are put to rest with the promulgation of the PRC Property Law(中华人民共和国物权法). It does not, however, feel that tightened measures will undermine solid growth overall.

"A more regulated macroeconomic environment will further stabilize the development of the property sector," says Kenny Suen, managing director of Vigers Asia Pacific. Suen tells China Law & Practice that the new law has given clarity to the property market in China and "gives more confidence to investors". He believes that any changes resulting from the new legislation will be positive, as there is now less uncertainty as to whether lease-holds will be renewed.

While the property market in China continues to thrive despite tightening measures, further measures are expected, including raising the deposit reserve ratio and raising interest rates. The Shenzhen government is expected to make restrictions on the valuation ceiling for mortgage loans, in a move that could curb speculation on the secondary market.

Suen believes that administrative measures over the past few years, such as the People's Bank of China raising interest rates and capital reserve rates, have been effective in curbing reckless acceleration, and that the continued use of such measures are China's best bet for regulating its economy.

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