Economy

Sales fall as tightening policies bite

By Hu Yuanyuan (China Daily)
Updated: 2011-04-06 08:06

BEIJING - China's key cities experienced a big fall in property sales last month over the same period in 2010, showing that tightening real estate policies are beginning to bite, China Index Academy said in a report on Tuesday.

Among the 30 large- and medium-sized cities the academy monitors, nearly 80 percent saw a year-on-year drop in property sales, with Beijing leading the trend with a fall of 48 percent.

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However, on a monthly basis, these cities still reported a robust growth in property sales, led by second-tier cities, including Baotou, Inner Mongolia autonomous region, and Dalian, Liaoning province, which reported growth of more than 100 percent.

Property prices in major cities dipped in March, with those in Shanghai declining 7.57 percent month-on-month to 13,806 yuan ($2,104) a square meter. Prices in Guangzhou also dropped by 5.65 percent and Shenzhen fell by 3.07 percent.

Two cities, however, experienced a big price fluctuation last month, with the price in Chongqing climbing by 18.52 percent and that in Ningbo plummeting by 29.06 percent from the previous month.

Chen Jun, head of a speculative home purchase group from Zhejiang province, was quoted by China Times as saying that the group is quitting first-tier cities because the profit margin has been shrinking after real estate policies tightened.

"The cost of entering the residential property markets in Beijing, Shanghai, Guangzhou and Shenzhen is now too high, and the growth rate of property prices in these cities will largely slow down," he was quoted as saying.

Among the tightening policies, the one that restricts the number of homes a family can purchase is regarded as the most effective in curbing speculative home purchases. In Beijing, for instance, people without a Beijing hukou (resident identification) must have paid their monthly social security contributions or income tax for five consecutive years before they are eligible to buy their first apartment in the city.

People with Beijing resident identification are limited to two properties, and eligible non-locals are allowed to buy only one. As a result, most investors are turning to the commercial sector in first-tier cities and residential projects in second- and third-tier cities.

Feng Lun, chairman of Vantone Holdings Co Ltd, one of the largest property developers in Beijing, said that the company's investment in the commercial property sector has risen by more than 50 percent.

"In the past eight years, the central government has issued 40 policy items targeting the country's property market. If we follow short-term market fluctuations, we will hardly survive. So, we need to have a long-term strategy based on industry discipline and economic development," Feng said.

China Daily