Guangzhou property prices rise despite tough cooling measures

PUBLISHED : Tuesday, 04 July, 2006, 12:00am
UPDATED : Tuesday, 04 July, 2006, 12:00am

Guangzhou property prices rose 246 yuan per square metre, or nearly 4 per cent, last month despite official measures to cool the market.

Analysts said the market remained firm as buyers and sellers waited for detailed guidelines on implementing central government directives limiting the size of apartments to be built, and would stay firm for at least one more month.

In Tianhe district, several luxury apartment projects came on the market, artificially pushing prices up 1,600 yuan a square metre, while prices also rose in Baiyun and Huangpu districts, but the market was weaker in Haizhu, Yuexiu and Liwan districts.

Hope Real Property manager Pan Yuhao said prices rose because housing supply in the city was tight and most of the new projects launched during the month were luxury units costing more than 10,000 yuan per square metre.

'The 246 yuan increase is not a reasonable measure of the market situation. The rate of increase in May is a more reasonable and accurate reflection of the market,' Mr Pan said.

'Based on our figures, prices of properties in the same range rose 2 to 3 per cent last month, which is a reasonable increase,' he said, adding that the rate of increase should not pose a problem because there would be a clampdown on the supply of large apartments.

Zhao Zhuowen , general manager of TCZY Property Investment Consultants, also said the increase was normal and the Guangzhou market should be assessed on a quarterly or half-yearly basis, rather than shorter periods. 'Prices have definitely not fallen, even though the measures are tough,' Mr Zhao said.

'Guangzhou prices are still firm because developers are in a wait-and-see mode. They have not reached the stage where they have to lower prices to sell.'

Buyers and sellers were putting off transactions in new properties, causing a 40 per cent shrinkage in the number of deals compared with June last year, he said.

Some people were waiting to see whether a 90 square metre limit on the size of future apartments referred to the gross or net area and also how Guangzhou authorities would interpret a central government requirement that such apartments make up 70 per cent of properties built.

The analyst said Shenzhen was sticking to the letter of the policy and applying the ratio to every project, but in Nanning the ratio was being evaluated on a district-by-district basis.

While developers were not prepared to see prices fall, some analysts said small and medium-sized developers, facing cash-flow problems as a result of the measures, were offering perks to push sales.