Government efforts to cool down the nation's red-hot property market are unlikely to have a major impact on China's building materials sector, according to a report from the China Building Material Circulation Association (CBMCA).

The Building Materials Home Index (BHI), an indicator compiled by the CBMCA tracking market developments and predicting industry trends, showed that purchases of building materials increased in April compared to the previous month, with the BHI rising 12.7 percent.

Despite the cooling of the property market, which has directly impacted demand for building materials, experts say the building materials market will remain unscathed or even take off because there are more buyers with basic needs, those who purchase homes to live in rather than for investment.

"It is people who have basic needs in the real estate market that are the purchasers of building materials," said Qing Zhanxue, deputy director of CBMCA, pointing out that most houses purchased last year were neither decorated nor used because they were bought for investment purposes.

"The government is curbing the investment demand that was lifting property prices, rather than the actual demand for homes," he added.

Statistics from the China Index Academy show that among the 35 major cities it monitored, transactions dipped in 26 cities over the past two weeks, with an average decline of more than 20 percent.

"People's basic needs for housing still have to be met and the number of newly built residential projects is likely to rise this year because there must be enough supply to lower property prices," said Qing. "This will be good news for the building materials industry."

(China Daily May 19, 2010)