New prop­erty poli­cies make im­me­di­ate im­pact

China Daily (Canada) - - SHANGHAI - By WANG YING in Shang­hai

wang_y­ing@chi­nadaily.com.cn

The home-buy­ing frenzy has been ef­fec­tively tem­pered in Shang­hai and Shen­zhen fol­low­ing the re­lease of cool­ing mea­sures on March 25, in­clud­ing stricter home buy­ing re­quire­ments and the tight­en­ing of credit lines, ac­cord­ing to in­dus­try ex­perts.

Weekly trade vol­ume of new homes in Shang­hai was halved from 785,500 square me­ters in the last week of March to 392,800 sq m the pre­vi­ous week, ac­cord­ing to Cen­taline Prop­erty Agency. Sim­i­larly, in the sec­ondary mar­ket, the vol­ume dropped from 536,900 sq m to 287,700 sq m within the same pe­riod.

Chen Lina, an­a­lyst from Shang­hai Sinyi Realty Agency and Con­sult­ing Co, added that the daily trade vol­ume of used homes fell from 2,008 units to 1,290 in the wake of the new prop­erty mea­sures. Fur­ther­more, there was a 40.33 per­cent drop in the num­ber of peo­ple look­ing for homes and daily vis­its to prop­er­ties also fell 36 per­cent.

In Shen­zhen, 652 new homes were sold in the week start­ing Mar 28, down 29.67 per­cent weekon-week, and the av­er­age trad­ing price also soft­ened to 49,621 yuan ($7,670) per square meter, drop­ping 4.17 per­cent, based on data by SouFun Hold­ings Ltd.

Though Bei­jing is the only first­tier city that has yet to an­nounce new prop­erty mea­sures, the trans­ac­tion vol­ume of the cap­i­tal’s first­hand homes de­clined from 202,500 sq m to 187,500 sq m in the week start­ing Mar 28. How­ever, more homes changed hands in the sec­ondary mar­ket, with 762,700 sq m traded in the same week, com­pared to 737,900 sq m the pre­vi­ous week.

Zhang Dawei, chief an­a­lyst at Cen­taline Prop­erty Agency Limited in Bei­jing, said that the ex­ist­ing mea­sures have been ef­fec­tive at tam­ing the prop­erty mar­ket.

“While price growth in Bei­jing’s res­i­den­tial mar­ket has also been strong, the cap­i­tal al­ready has rel­a­tively strict re­quire­ments for non-lo­cals look­ing to buy homes. There could also be fur­ther re­stric­tions on loan amounts to sec­ond-home pur­chasers,” said James Macdon­ald, head of re­search for Sav­ills in China. “The res­i­den­tial mar­kets in first­tier cities need to be closely mon­i­tored and ex­ist­ing reg­u­la­tions need to be prop­erly en­forced. The sooner a com­pre­hen­sive prop­erty reg­is­tra­tion and tax pol­icy are in place, the bet­ter re­sults we will ex­pect. Also, the govern­ment should look at sup­ply side fac­tors to ease the pres­sure on ex­ist­ing hous­ing stock,” said Macdon­ald.

Prop­erty an­a­lysts said first quar­ter data shows that the res­i­den­tial mar­kets in ma­jor sec­ond-tier cities are set to take over the heat from their first-tier coun­ter­parts.

“Trans­ac­tions in hot sec­ondtier cities have more than dou­bled com­pared to the same pe­riod last year, with 4.1 mil­lion sq m of new com­mer­cial hous­ing be­ing traded in Hangzhou of Zhe­jiang prov­ince, a 136 per­cent year-on-year growth. Over in Suzhou and Nan­jing of Jiangsu prov­ince, trans­ac­tions were up 129 per­cent to 3.3 mil­lion sq m, and 122 per­cent to 4 mil­lion sq m re­spec­tively,” said Ding Zuyu, ex­ec­u­tive pres­i­dent of E-House (China) Hold­ings Ltd.

Due to the pur­chas­ing lim­its in first-tier cities, home trad­ings in the neigh­bor­ing cities of Wuxi in Jiangsu prov­ince, as well as Dong­guan and Foshan in Guang­dong prov­ince rose quickly. Fur­ther­more, home sales in some cities such as Tian­jin, Ji­nan of Shan­dong prov­ince, Ningbo of Zhe­jiang prov­ince, Shenyang of Liaon­ing prov­ince and Changzhou of Jiangsu prov­ince, that were for­merly haunted by high stocks have started to pick up.

The com­par­a­tively loose mea­sures in key sec­ond-tier cities that are lo­cated in key eco­nomic ar­eas will catch mar­ket at­ten­tion, said Chen Zhong­wei, head of re­search with CBRE Greater China. He added that home prices and trade vol­umes in th­ese cities will be on the rise in the com­ing six months.

While China’s eco­nomic growth is slow­ing from dou­ble dig­its to be­tween 6 and 7 per­cent, it is nat­u­ral for home prices to slow down to match the eco­nomic in­dex, added Chen, who be­lieves that the ma­jor­ity of lower-tier cities will con­tinue to suf­fer from over­sup­ply.

The sooner a com­pre­hen­sive prop­erty reg­is­tra­tion and tax pol­icy are in place, the bet­ter re­sults we will ex­pect. Also, the govern­ment should look at sup­ply side fac­tors to ease the pres­sure on ex­ist­ing hous­ing stock.” head of re­search for Sav­ills in China

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