Home prices to experience adjustment in China

A collapse of China's property sector is unlikely, with house prices likely to experience a period of adjustment, an economist at a government think tank said Friday. The remarks were made by Song Li, deputy head of an economics research institute affiliated to the National Development and Reform Commission (NDRC), the top economic planning body, at a briefing in Beijing. Home prices could experience "periodic adjustment" either upward or downward, Song said. The economist excluded the possibility of a "long-term declining trend" and a property market collapse. As China's urbanization process is far from complete, strong demand still exists, and the time has yet to come for prices to fall on a large scale, Song said. Home prices in Japan started to decline overwhelmingly when the urbanization rate reached 60 percent to 70 percent. However, the urbanization rate in China is still 38 percent to 39 percent, he said. The remarks came amid falling home sales and cooling property prices nationwide. Official data showed sales of residential property dipped 7.7 percent during the first quarter of 2014 to 1.1 trillion yuan (about 176.5 billion U.S. dollars). Home prices in a pool of 70 major Chinese cities grew at a slower pace in March, with fewer cities reporting month-on-month price gains. Month on month, four cities saw new home prices decline. Home prices data for April is due to be released on Sunday, and analysts expect the cooling trend to continue.