Could China Property Prices Drop?

According to a Standard Charted Bank research report, signs of a bubble are surfacing in China's selective tier one cities. While the prices are expected to stay firm in these cities, a drop in prices in tier two cities is expected.
Analysts says that rapid income growth is helping support the price increases in China's real estate but tight monetary policy and anti-bubble measures have put a squeeze on housing demanand and rising inventory level points to a possible price correction next year.

The property prices in tier two cities are likely to drop as inventories increase at a faster rate in the second half of 2011. Rising invetory in these cities is partly due to property developers moving away from tier one cities amid more stringent property cooling measures.

The Chinese government has tightened macroeconomic preasures to curb the country's rising inflation while launching measures to prevent a bubble.

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