China realty prices unlikely to drop in 2010

Beijing : China's property prices won't plunge this year, two of Hong Kong's biggest developers with operations on the mainland said yesterday, as the World Bank joined economists and hedge fund managers warning of a bubble.

"China's home prices won't drop too much, as the government can't allow prices to plunge because the real estate market is an important pillar of the economy," Henry Cheng, managing director of New World Development Co. and son of its billionaire founder Cheng Yu-tung, said.

Raised rates

Property prices in China rose 10.7 per cent in February, the steepest gain in almost two years, even after banks raised mortgage rates.

The surge — along with a stock market rally, quickening economic growth and inflation — led the World Bank to say China should raise interest rates to help contain the risk of a bubble.