The Qingdao residential real estate market has reached an inflection point which started with a sharp decline of property sales beginning back in March 2011. The ongoing decline in housing sales has been followed by a 10 to 20 percent decline in property value of existing developments, and a dramatic decline from 30 to 50 percent for new and presold units under construction, respectively. Despite these declines most eligable buyers remain on the sidelines waiting for further reductions in property value before putting their cards on the table. The report released by The People’s Bank of China (PBOC) confirms what we have seen here in the local residential & commercial property markets over the past 3 quarters. As of yet, we have not seen a correction in the residential and commercial rental markets, lease prices have remained stable.
The current concern voiced by the Central Bank of China about panic selling and the chain effects on the economy from a fall in real estate prices was heard in round-table talks with the statistics department of the China Banking Regulatory Commission and staff members from the risk management departments from 10 of the largest real estate developers in China, as well as academia from three top universities.
The central bank's decision on December 5, 2011 to lower the reserve requirement ratio for the first time in three years signaled a broader move to pump money into the slowing economy. At this point it appears that a down turn in China's real estate market is inevitable; many speculate on the impact of its landing. Property purchase limitations in Qingdao, Beijing, Guangzhou, Shenzhen, Jinan, Fuzhou, Changchun, Xiamen and Taiyuan will continue through 2012. With sales remaining weak and the current bank loan restrictions in place, property owners and developers will have to further reduce property prices to entice new buyers.