Housing prices to decline, says BNP

A residential building is under construction in Yichang, Central China's Hubei Province, July 9, 2008. [Asianewsphoto]

Home prices will decline from this month as the government maintains its lending curbs and increases the supply of public housing, forcing property developers to cut prices to boost sales, BNP Paribas said.

"Although the government has not quantified its target, it has indicated that it wants to see a housing-price correction take place in order to meet or partly meet public expectations," Chen Xingdong and Isaac Meng, Beijing-based analysts at BNP Paribas, said in a report on Friday, without giving a forecast for how much prices may drop. "We expect a housing price correction to take place from September onwards."

The central government intensified a crackdown on real-estate speculation after property prices surged by a record in April. Besides raising minimum mortgage rates and down-payment ratios for some home purchases, the authorities have pledged to boost land supply and the construction of low-cost public homes. Property prices in 70 major cities climbed 10.3 percent from a year earlier in July, according to the statistics bureau.