Quake to hurt local property market

BEIJING, May 28 -- The May 12 earthquake could cripple Sichuan province's property market in the short term by dampening consumers' will to buy and reducing investment-oriented purchases, industry experts said.

A residential building destroyed by the earthquake in Shifang  county, Sichuan province. (Photo: China Daily/Gao Erqiang)

BrilliantStone, a Beijing-headquartered real estate research and advisory firm, said the "psychological shadow" hanging over the economic losses in Sichuan and Chongqing could diminish enthusiasm for purchasing property in the area.

Yang Hongxu, deputy director of Shanghai-based E-house Real Estate Research Institution, said the quake would also largely reduce investment-oriented purchases in quake-affected areas, putting greater pressure on property prices in the region.

But Bohai Securities analyst Zhou Hu said the quake's impact on Sichuan's property market would be limited.

Most leading property developers only have projects in the provincial capital Chengdu, and few have projects in the nearby counties most devastated by the quake, Zhou said.

In addition, these counties - Wenchuan, Maoxian, Beichuan, Qingchuan and Dujiangyan - haven't traditionally been hives of market demand in the region, he added.

"So while the earthquake would weigh on property sales in Sichuan and Chongqing in the short term, it's unlikely it would hex these markets in the long run," Zhou said.

Some insiders believe the quake would instead boost housing demand, because so many homes were destroyed in the disaster.