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China Briefings

Reports on China issued by Samsung Economic Research Institute

China's Real Estate Policies & Market Prospect

China's Real Estate Policies & Market Prospect

Samsung Economic Research Institute Beijing Office

Nov. 27, 2009

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Chinese housing market started to recover from 2009

□ Chinese housing market declined in terms of transactions and prices in 2008.

• The size of apartment sold and sales from 1998 to 2007 increased by 24.3%, and 33.2%, respectively.

• Apartment sales started to decline in early 2008, when the size of apartment sold and sales decreased by 19.7%, and 20.1%, respectively. The average sales price dropped for the first time in ten years.

- Housing prices in some regions of China dropped more than 30% from their in 2007 peak.

• The contraction in real estate industry is attributed to policy changes and the global financial crisis.

- The Chinese government has raised interest rates and the bank reserve ratio numerous times since 2007 to contain demand for home purchases. It also has lowered the ratio of loans taken out by households with two houses.

- Meanwhile, the Bank of China has decreased its lending to real estate agents, many of whom faced financing difficulty.

- With the meltdown in the US real estate market and the global financial crisis, overseas buyers and wealthy Chinese lost their purchasing power and many other potential home buyers chose to stay on the sidelines.

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