China’s property prices are unlikely to fall further as increased money supply and credit expansion inflate asset prices, BNP Paribas said, citing China Real Estate Chamber of Commerce President Nie Meisheng.

Residential prices will be the first to rebound, driven by urbanization, followed by commercial property such as shopping centers, BNP Paribas wrote in a note today, citing comments made by Nie at a 11 June workshop organized by the bank.

China’s domestic banks extended a record 5.84 trillion yuan ($855bn) of loans in the first five months of 2009, almost triple the value a year earlier. Zurich-based UBS AG forecasts new credit may reach 8 trillion yuan in 2009. Housing prices in 70 Chinese cities fell 1.1% in April from a year earlier, the smallest drop in three months, according to data from the National Development and Reform Commission.

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