First-tier cities could see boom in real es­tate

China Daily (Canada) - - FRONT PAGE - By ZHENG XIN in Bei­jing and WU YIYAO in Shang­hai

China’s first-tier cities are likely to ex­pe­ri­ence a real es­tate boom, and an­a­lysts be­lieve the prop­erty mar­ket is off to a well-grounded start this year as prop­erty group China Vanke Co plans to raise its prop­erty prices in Bei­jing.

Vanke, China’s largest res­i­den­tial de­vel­oper by rev­enue, will in­crease the prices on two projects in south­ern Bei­jing, ac­cord­ing to a pro­ject in­tro­duc­tion ad­ver­tise­ment by the com­pany.

How­ever, it did not dis­close the range of in­crease.

In Shang­hai, mean­while, the av­er­age price for new homes has grown by more than 10 per­cent in the past two months, from 42,300 yuan ($6,470) to 47,000 yuan per square me­ter, as de­mand re­mains ro­bust with sup­plies go­ing fast, ac­cord­ing to data from real es­tate in­for­ma­tion plat­form an­juke.com.

Mar­ket pro­fes­sion­als said ex­ist­ing in­ven­to­ries of avail­able homes are be­ing re­duced at a rapid pace be­cause buy­ers worry that if they don’t buy now, prices will con­tinue to rise and they will no longer be able to af­ford to buy.

Cao Xiao­liang, 38, the father of two boys, said he has had to drop his plan to buy a more spa­cious home be­cause of the price hikes.

“It is so crazy that the price of a 100-square-me­ter apart­ment rises some 400,000 yuan in just 15 days af­ter the Lu­nar New Year,” said Cao.

Guo Yi, mar­ket­ing di­rec­tor of the Ya­hao Real Es­tate Sell­ing and Con­sult­ing So­lu­tion Agency, said the gov­ern­men­tal mea­sures re­leased re­cently to boost the prop­erty mar­ket have a lot to do with the real es­tate price in­creases in first-tier cities.

Deed and busi­ness taxes for home pur­chases in most cities will be cut in an at­tempt to re­lieve the prop­erty glut.

For ex­am­ple, the deed tax on homes of more than 90 square me­ters will be re­duced to 1.5 per­cent from the cur­rent 2 per­cent for first-time buy­ers in all Chi­nese cities.

“The se­ries of poli­cies in­di­cate that the prop­erty mar­ket in 2016 will see a re­laxed pol­icy en­vi­ron­ment, which is ex­pected to fur­ther stim­u­late more prop­erty de­vel­op­ers to pur­chase more land,” Guo said.

An­a­lysts also said this trend may not ben­e­fit the mar­ket in the long term, be­cause de­mand for trad­ing up may be ex­hausted soon and solid de­mands for first homes are not met due to a gap of af­ford­abil­ity as prices quickly in­crease.

Lu Chao, an an­a­lyst with Hanyuan Realty Co, said city au­thor­i­ties’ de­ci­sion to ad­just land sup­plies may help the mar­ket be­come more ra­tio­nal.

The sec­ond­hand hous­ing mar­ket is just as ac­tive as that for newly built apart­ments.

Con­tact the writ­ers at zhengxin@ chi­nadaily.com.cn

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