China's overheated real estate market may see a big change and the property prices will drop in the fourth quarter of this year after a series of tightening measures to cool down the market, Xu Shaoshi, minister of land and resources said Sunday.
"Currently the real estate market has seen sales volumes plummet and prices remain sluggish. After another three months, the market may face a correction and prices will fall. However it's hard to predict how much the price drop will be," Xu said at a meeting of local land and resources chiefs in Dalian, Liaoning province.
In the wake of policy tightening by the central government since mid-April, the home transactions have fallen drastically in major cities over the past two months.
Although housing prices continued to rise compared with a year earlier, the increase rate is slowing from previous months. In May, China's property prices in 70 cities rose 12.4 percent from a year earlier, down from a record 12.8 percent in April.
Xu also said the government will strengthen the supply and management of land for developing real estate projects.
As high as 59 percent of people believe the property price may fall and 90 percent believe the current housing price is too high, China Index Academy said in survey results published on June 27.
However, Xu's confidence and the public expectations are not shared by real estate tycoons like Ren Zhiqiang, chairman of Hua Yuan Real Estate Group. Ren said China's real estate price will continue to rise in the long run as the urbanization process will ensure the growing market demand.
As more people delayed home purchase plans on expections of a drop in housing prices, rentals rose in major cities. In Beijing, rentals rose more than 20 percent in May and April from a year earlier.
