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Property bubble fears ease - slightly

Irish Times
Property bubble fears ease - slightly - China - Beijing

TO THE World Bank office in Beijing, where the multilateral lender cut its forecast for China’s 2012 economic growth to 8.2 per cent, but said the chances of a soft landing were good, and the prospects of a disastrous property crash in the world’s second biggest economy are receding.

“China’s gradual slowdown is expected to continue into 2012, as consumption growth slows somewhat, investment growth decelerates more pronouncedly and external demand remains weak,” said Ardo Hansson, lead economist for China, who is soon to take over as head of the Estonian Central Bank.

China’s domestic property market, which accounted for 40 per cent of GDP last year, haunted the nightmares of many a policymaker and entrepreneur last year, as the prospect of a bubble bursting was too awful to contemplate.

The main Tier-One cities, such as Shanghai, Beijing and Guangzhou, were gripped by a dizzying speculative frenzy, forcing the government to introduce a raft of measures two years ago to cool their ardour.

Things looked positive regarding tightening on an overall national level, but the Chinese market was very diverse, according to Hansson, and while most cities were registering price falls, real-estate prices were still rising in some places, and developments in specific cities might require particular policy responses to prevent wider fallout. “Property is a difficult area to micromanage,” said Hansson. “There’s a lot of uncertainty about the timing of the effects after you pull the policy levers.”


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