Home sales jump as economy slackens
The mainland's residential housing sales jumped last month as homebuyers shrugged off property curbs amid expectations that a slowing economy would force the government to ease some of the restrictions.
New home sales in June amounted to 531.3 billion yuan (HK$652.1 billion), up 41 per cent from the previous month, according to the National Bureau of Statistics. The surge in sales value is interpreted by industry officials as a precursor to a turnaround in the property sector.
The statistics bureau didn't provide a month-on-month comparison in the report on real estate investment and sales.
The monthly figures were based on the difference between the data for the first half and the first five months. The bureau said home sales between January and June actually fell 6.5 per cent from the same period a year ago. The mainland witnessed a spurt in home-buying last month amid speculation that Beijing would ease curbs on the property sector.
Premier Wen Jiabao last week pledged to maintain the property curbs, ordering local governments not to waive existing policies aimed at capping prices. But would-be homebuyers, after a year of the austerity measures that were introduced to cool the once-hot property market, seemed to think otherwise. With the economy slowing, many now believe it is the right time to buy as the curbs could soon go and prices jump.
'The strong sales were driven by pent-up demand,' said Albert Lau, managing director of Savills China. 'There is a consensus among homebuyers that housing prices would jump once the curbs are eased,' he said, adding that it is just a matter of time before the tightening measures are lifted.
A broker surnamed Wang at property agency Century 21 China Real Estate, said homebuyers were disappointed with the property curbs and nearly all of them were betting that a new round of price rises are in the offing.
'Many young couples anxious to buy a flat for own use decided to act now because they believe prices have already hit rock bottom,' said Wang. 'They see the government's statements on further tightening as empty promises.'
Beijing sought to crack down on housing speculators - who bought homes on massive mortgage loans and made a killing by selling them at high prices as property prices kept soaring in the past decade - when it imposed tightening measures such as increasing mortgage rates and limiting residents' home purchases. But the efforts failed to pay off as prices stayed nearly flat in the past year.
Those who already own several apartments, the likes of whom the government sees as speculators, have merely raised the rents to pass the higher mortgage interest costs on to tenants.
Chen Jianming, a Shanghai resident in his early 30s, bought a second-hand flat last month. 'The economy is in a bad shape and it is highly likely the government will take measures to stimulate the economy soon,' he said.
Sheng Laiyun, a spokesman for the statistics bureau, yesterday said the economy, which grew 7.6 per cent in the second quarter - the slowest pace in three years - was partly dragged down by the housing curbs.
Last weekend, Premier Wen said his cabinet would do something 'noticeable' and 'inspiring' to combat the slowdown. Those comments left economists confused as most believe no substantial measure other than reviving the housing sector would be strong enough to boost the beleaguered economy.