EXPERTS attending a real-estate forum in Shanghai at the weekend were optimistic about the city's housing market, despite the tough times of the past few months.
Government officials, developers, finance experts and property researchers attending the forum agreed long-term prospects were good for both the new and second-hand markets.
"The tightening measures introduced by the central government over the past few years to cool the country's overheated real-estate market have so far proved to be effective as price growth has been controlled," Li Wuwei, a noted economist and vice-chairman of the 11th National Committee of the Chinese People's Political Consultative Conference, told delegates in a keynote speech at the 2008 Yangtze River Delta Real Estate Forum, in Pudong on Saturday.
Li said the central government's aim was to slow the price growth of real estate instead of cutting prices, and it was better to keep salary growth higher or at least similar to the growth of commodity housing prices.
The country's housing market reached its heyday between May and September last year with a record number of new homes being sold.
In Shanghai in that period both homes and land were zealously sought by home buyers and developers.
According to statistics released by the Shanghai Uwin Real Estate Information Services Co Ltd, between May and September 2007, more than 2 million square meters of new housing was sold each month in the city, with a record 2.64 million square meters transacted in June.
However, a state effort in late September to rein in speculation in the domestic real estate market - an increase in down payments and interest rates for people with more than one mortgage - dealt a major blow to the overheated market.
A regulation introduced by the People's Bank of China and the China Banking Regulatory Commission on September 27, meant mortgage holders who applied for another home loan would be required to produce a down payment of at least 40 percent and pay a 10 percent premium on their interest rate.
Requirements on the first mortgage remained unchanged - up to 30 percent in down payment and a 15-percent interest discount.
On December 11, the central bank and the regulator further clarified that second or subsequent mortgages were defined to include family units, including spouses and children, and families who used the public housing fund and applied for lending from commercial banks on another property then had to face tougher credit requirements.
The policy, coupled with continuously higher interest rates on lending and deposits at commercial banks, as well as a higher reserve requirement ratio ordered by the central bank, are believed to have cooled the country's overheated housing market, industry people said.
In Shanghai the local supply of new commodity housing fell 11.7 percent to 6.18 million square meters in the first half of this year, and the transaction volume plunged nearly 50 percent to 5.259 million square meters in the same period, Uwin statistics show.
The city's used-apartment market was also rather gloomy.
The second-hand housing index, which tracks prices and transaction volumes of used apartments in Shanghai, gained only 1.05 percent in June, with the transaction volume dropping by about 25 percent from May and home prices declining by 5 percent in one-fifth of all monitored areas.
However, despite the depressing figures, forum speakers all expressed optimism for the industry's future.
"The real-estate market has entered a correction at the moment with declines in both home sales and buyers' confidence," Zhu Zhongyi, vice chairman of China Real Estate Association, told the forum.
"It is a very tough time for domestic real-estate developers but the market will certainly thrive in the long run."
Guo Guangchang, chairman and chief executive officer of Fosun, China's biggest comprehensive private company with interests in steel, real estate, pharmaceuticals, retail, mining, financial services and strategic investment, said he remained upbeat about Shanghai's real-estate market.
"The correction period will probably last one year or so at the longest," said Guo, who was ranked third in a 2007 Forbes 400 Richest Chinese list.
Hua Wei, director of the Fudan University Real Estate Research Center, told the forum that excessive liquidity would make the property market attractive to investors, and Zhang Zhongde, vice governor of the Shanghai branch of China Construction Bank, said real estate was, is and will always be a pillar industry in the country's economy.