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Pessimism in China’s Housing Market Continues

Since January, the housing market has been experiencing a sharp downturn due to the facts that, in addition to other factors, banks have been tightening credit and inventory has increased. Commodity housing sales in large and medium sized cities slid by 20 to 30 percent with some down as much as 40 to 50 percent. 

In Shanghai, for example, new housing transactions were down 25.56 percent for the first 21 days in May, compared to the same period in April, and down by 34.86 percent compared to same period last year. 
Market analysts believe that, were the banks to loosen credit, the pessimism in the housing market would not change. In fact, it is almost impossible for banks to loosen credit to stimulate the housing market. A reduction in housing prices seems to be the only option to deplete the existing inventory. 

Source: 21st Century Business Herald, May 29, 2014