Demand sees prices on mainland keep climbing

PUBLISHED : Wednesday, 24 March, 2010, 12:00am
UPDATED : Wednesday, 24 March, 2010, 12:00am

Dongguan hotel worker Annie Qing is desperate. Over the past few months she has watched in despair as flats in a popular project in the city came up for sale and were all taken before she got a chance to get one for herself.

'The developer of the project Dongtian Garden recently sold out more than 300 units in the last launch at the end of last year. The next batch of units will be launched in May but prices will be 10 per cent higher,' said Qing, 24, who is at present renting a 100 square metre unit and paying a rent of about 2,000 yuan (HK$2,273) per month.

Qing moved from her hometown in Chengdu in Sichuan to work in the housekeeping department of the Hui Hua International Hotel in Dongguan a year ago. 'Prices have been surging in Dongguan since last year. If I do not buy now, prices will go up next month. I am very desperate now.

'My younger sister bought a unit at the development at the end of last year. If I had bought it at that time, I would not have any problem right now. I regret missing that opportunity because I am so eager to buy as I need a place to live,' she said.

Qing's eagerness to own a home is one example of many on the mainland. It helps explain why sales in mainland cities have shown signs of picking up after a short-term decline in the last few weeks. 'Real demand remains strong nationwide,' said Samuel Wong Shu-kuen, head of Midland Realty's Shenzhen office. But compared with the same period last year, total deals were still largely behind, he said.

According to Centaline Property Agency, sales volumes in many mainland cities recorded week-on-week growth last week. Second-tier cities such as Tianjin, Chongqing and Wuxi outperformed the first-tier cities, with sales in the primary market up 20 to 30 per cent week on week, it said.

The turnaround follows a decline in February versus January due to the Lunar New Year holiday and uncertainties over the government's austerity measures. But with the holiday over and an anticipation of fewer serious measures to hit the market, buyers started coming back in many cities, agents said.

Sales volumes in the first three weeks of this month have significantly surpassed total transactions achieved in February. For example, there were 3,255 units sold in Wuxi in the first three weeks, representing a 26.26 per cent gain over sales in the comparable period in February, according to Centaline.

In Beijing, 1,629 units were sold in the first two weeks of this month, up 47.81 per cent over the same period in February and in Shenzhen, 627 units were sold last week, according to government figures, representing a 72.3 per cent week-on-week rise.

With fewer speculators in the market prices were likely to stabilise, Wong said. 'The market is unlikely to repeat the performance of last year. Whether sales volume will go down depends on any new government measures,' he said.

Mainland property prices rose for nine straight months up to February, the National Development and Reform Commission said, buoyed by the government's loose monetary policy and the four trillion yuan stimulus. In February alone home prices nationwide rose 10.7 per cent from a year earlier.

But in certain segments of the market prices have increased more than 80 per cent - notably in high-end housing in cities such as Shenzhen, Beijing and Shanghai.

'Second and third-tier cities like Dongguan did not see a fast pace of growth last year. So there is still room for prices to rise,' said Pang Yanqing, the sales manager at Dongtian Garden in Dongguan's Changping area.

'I don't believe prices will come down even though the government is introducing measures to cool the market,' said Qing, the hotel worker.