China's property story still goes on despite easing of curbs
Price changes in top cities on the mainland are a better indicator of the health of the market
More than 30 cities on the mainland have lifted home purchase restrictions in the past few months to allow locals and non-locals to buy more than one home.
Analysts are divided on what this means. One camp thinks such an easing policy can help attract capital, while the other view is much more pessimistic, believing the move simply means the market crash will come sooner or later.
It has been interesting to watch analysts at big investment banks predict property prices on the mainland over the past decade. Some have continuously seen a crash almost every year. However, the market is so big that it is not realistic to generalise on the property price outlook.
Indeed, big price falls could happen in some small, third-tier cities like the so-called ghost cities where there is an imbalance between the number of residents and new properties. But if you want to buy a nice apartment in a good location in a top-tier city, you have to be more realistic about how much you can afford.
That is why a nationwide index on average property price changes on the mainland will not make sense because you cannot buy anything based on such an index, given the size of the country.
If you really want to know the health of the market, you should focus on price changes in big cities like Beijing or Shanghai. For example, if you see many popular apartments on Hua Shan Road in Shanghai's consulate area suddenly come up for sale with a 20 per cent discount, it will really be the end for the market.
For now, though, especially in areas such as Hua Shan Road, it is still clearly a sellers' market. Owners are not in a hurry to sell or they just want to keep leasing the properties out for better and stable long-term returns.
In fact, if property markets in Shanghai or Beijing begin to show signs of a crash, that will also be a sign of a downtrend in the mainland economy.
Some analysts estimate property sales could represent more than 10 per cent of the country's gross domestic product. If we include all property-related businesses such as construction and even renovation, then a fairer contribution from the sector could end up being 20 to 30 per cent.
To some extent, the mainland needs property developers to support its growth more than they need the government. Some developers have expanded their investments beyond the mainland to the United States and the Middle East in the past few years, at a time when the industry was labelled almost as an "evil" business by state media as social unrest was on the rise due partly to the widening income gap and complaints by people about how difficult it was to buy their dream homes.