Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Cri-Report Trend Of China Real Estate Market, 2012

cri-report: For the real estate industry, the inhibition of the policy measures about the speculative investments and demands should be strictly enforced and the control results should be further consolidated which are conductive to the return of the reasonable prices. Accordingly, the policies of the real estate market in 2011 will continue to steadily adhere to the measures of regulation and control and the prices will also continuously be adjusted.

National Bureau of Statistics reported that in the second half of 2011, the national average house price decreased by 3.5%, with the gross profit margin of 40% and net profit margin of 15% which were the basic average level of the real estate enterprises in 2011. The data shows that, since the second half of 2011, the gross profit margin and net profit margin of real estate enterprises both experience a decline and the net profit margin of over 20% becomes the history. Among it, the overall level of the gross profit margin on sales of the listed enterprises fell from 39.82% of the mid-2011 to 38.96% of the third quarter; the overall net profit margin on sales fell from 15.94% of the middle of last year to 14.86% of the third quarter.

In 2012, the funding gap of Chinese real estate market reached CNY1.3 trillion and in order to make up the gap, the sales volume should be increased by 25%. Experts believe that, under the premise that it should unswervingly adhere to the regulation and control; set encouragement on consumption and inhibition of speculation" as the goals and the ways and means of the regulation and control of housing also can be moderately adjusted. For examples, select good opportunities to adjust the areas of the purchase of the policies; moderately adjust the payment ratio of the first set ordinary commercial housing and the loan rates of the housing, etc. At the same time, in order to avoid a new round of speculation tide of the market caused by the expectation changes, the cost of regulation and control should be increased. Through the adjustment policies, a clear policy signal of "encouragement on housing and restrictions on investments" is sent to the market.

The purpose of the regulation and control on the real estate is not to crush the real estate market but to promote the healthy development of the market and better play the functions of the market. If the results of the regulation and control add increasing difficulties to the end users who demand to buy houses for live, then it is departed from the original purposes of the government.

Related research reports: