The sales growth rate of China's real estate industry is predicted to fall to around 20 percent in 2006 from 30 percent in the previous year, China Securities Journal reported Thursday.

 

Quoting a report of the National Development and Reform Commission (NDRC), the newspaper noted that the housing price hike would also slow down.

 

The NDRC report said China's real estate industry, which has been prospering since 2000, has entered a mid-term readjustment period in the later half of 2005 which is expected to last three to six years.

 

Meanwhile, it said the industry has not realized "soft landing" yet because of manipulation in the market, suggesting that the central government continue implementing strict policies on land, credit and taxation in a bid to avoid recurrence of a "bubble".

 

The report forecast the real estate industry's climate index, which reached a record 135.9 in the first quarter of 2004 and will fall to the lowest point in the second half of this year.

 

The climate index fell to below 102 in April 2005 and the downward trend has continued for eight successive months.

 

It also predicted housing prices in regions where speculation has spurred housing prices will drop remarkably this year.

 

The price drop of high-end houses will be greater than that of mid- and low-end houses, the report said, forecasting that second-hand house trading will decline due to rising trading cost and the price hike of second-hand houses will be lower than that of newly-built houses.

 

The report also predicted that bad bank loans will increase as a large batch of medium and small-sized property developers will be phased out the market due to lack of funds.

 

(Xinhua News Agency January 13, 2006)