Mainland property stocks slumped yesterday after news agency 21st Century Media reported speculation that the government would cancel the pre-sale system, prohibiting developers from selling unfinished projects.
News website Sina last night said a source from the Ministry of Housing and Urban-Rural Development denied the speculation, saying the government would not cancel the system because that would lead to a supply shortage and a surge in property prices.
The report triggered a fall in mainland property stocks. Shares in Shenzhen-listed China Merchants Property Development dived 9.81 per cent to close at 21.06 yuan (HK$25.63), while China Vanke fell 6.75 per cent to 8.70 yuan. Shanghai-listed Poly Real Estate plunged 9.17 per cent to 10.30 yuan.
Hong Kong-listed mainland developers also suffered, with China Overseas Land & Investment dropping 3.4 per cent to close at HK$17.70 and China Resources Land falling 4.63 per cent to HK$14.82.
'The rumour is ridiculous and malicious,' said Nichole Wong, regional head of property research at CLSA, adding that she believes the government would not forbid developers from pre-selling their projects.
'The government has to control the housing supply in order to check property prices. If developers are prohibited from selling incomplete projects, the existing supply of new housing will decrease by 90 per cent,' she said.