Chinese housing prices slightly higher short-term will not be callback

Real estate prices in major Chinese cities have risen sharply this year, sparking concerns about asset bubbles.　　Still, Deng, China's chief strategist at Goldman Sachs, yesterday continued to believe that China's current valuation of house prices is only slightly higher, not too high, and not yet frothy. "From the absolute level, China's first-tier city's real estate prices are still at the low end of the global level, but from the bear ratio, still appear slightly higher."　　Deng points out that current house prices seem to have digested future revenue growth factors.　　Prices in Shanghai and Beijing have risen faster than revenue growth of 30% and 80% per cent in the past 6 years, according to research data from Goldman Sachs.　　Still, Deng is inclined to believe that China's current valuation of house prices is not too high, and that there has not been a bubble.　　On the one hand, real estate valuations are not too high relative to other assets, Deng explains, "The valuation of the property market looks more reasonable in the main mainland investment channels, especially in relation to the stock market that has risen markedly this year". On the other hand, real demand may provide a cushion for downside risks.　　Deng that in China's long-term urbanisation, housing demand will remain strong, and if housing prices are significantly reversed, then potential homebuyers will be released to the market, providing support for housing prices. It is based on these two points that Goldman Sachs tends to think that China's house prices will not be a short-term correction. "What is more likely to happen is a convergence of housing and income growth, which is relative to the slower growth in house prices, which will make housing more affordable for the general public."　　"This convergence will be an ideal future scenario for the real estate industry and long-term economic development," Deng said.　　Deng further believes that long-term housing prices are related to income growth, but in the short term, policy changes and measures are key, loose monetary policy, local government attitude to land supply and tax policy, mortgage interest rates will affect price expectations. Deng cautioned that loose monetary policy tended to generate excess liquidity and lead to higher inflation expectations, leading to rising house prices. "If loose monetary policy lasts a long time, it does not rule out the possibility of a housing bubble." Xinhua）