The slowdown in China's property market is a normal adjustment after past stellar performance, a senior housing ministry official said on Wednesday, at a time of concerns that the sector's problems could weigh on the broader economy. Feng Jun, chief economist at the Ministry of Housing and Urban-Rural Development, said the government will continue to curb speculation in cities where home prices still face upward pressures, even as the overall market slows.
"In general, most indicators of our property market are at normal levels," Feng told a media briefing. "Previously the growth rate was so high, now the pace slowed a little bit, which is normal market adjustment," he said. After a strong performance in 2013, China's real estate market has softened this year. Sales have slowed and banks have become increasingly cautious about lending to developers and home-buyers.
As the sector accounts for more than 15 percent of China's annual economic output and affects 40 other industries, analysts see the property slowdown as a major risk to the economy, which in 2014 might grow at the weakest pace in 24 years. Official figures show the growth of property investment, construction activities and sales slowed in the first four months as developers cut their pace of expansion. Home prices in China still face upward pressures in some cities where a housing shortfall was difficult to solve in the short term, Feng said. Private surveys showed China's home prices fell slightly in May from the previous month, adding to fresh signs of cooling in a property market that skirted bubble territory in recent months.