Property sales rise again but crackdown is set to bite

PUBLISHED : Saturday, 12 March, 2011, 12:00am
UPDATED : Saturday, 12 March, 2011, 12:00am

In an effort to beat the introduction of measures to cool the property market, homebuyers on the mainland spent 447.1 billion yuan (HK$529 billion) in the first two months of the year, up 26 per cent from the same period a year earlier, according to the National Bureau of Statistics.

The value of all property transactions, both residential and commercial property, was 524.2 billion yuan, up 27 per cent on last year.

But that is all set to change when this month's figures are released, say analysts.

'The surge in sales value came because buyers brought forward their purchases of homes before banks tightened their mortgage lending and scrapped their mortgage discounts,' said Alan Chiang Sheung-lai, head of residential property research at DTZ.

'But the situation will reverse in the coming months,' he said, as sales were already slowing.

He believed the volume and value of home sales would now start to fall significantly and said transaction volumes had halved in most cities so far this month.

Home sales in both primary and secondary markets had already almost come to a standstill, he added, as more cities implement central government policy on restricting home purchases.

In late January, the government announced measures to curb property demand.

It raised down payments to 60 per cent of the cost of the property from 50 per cent and increased restrictions on buying second homes.

Mainlanders were barred from buying a third house if they already own more than two properties in the city in which they are a resident.

And a property tax was launched in Shanghai and Chongqing to tame the runaway home prices.

Chiang said: 'Even if you have money, you are not qualified to buy if you already own two or more apartments.'

In the first two months of this year, 81.43 million square metres of property was sold, 23.8 per cent more than in the same period last year.

Real estate investment rose 35.2 per cent to 425 billion yuan in the first two months from a year earlier. The residential sector alone accounted for 301.4 billion yuan or a 34.9 per cent increase from the first two months of 2010.

Jiang Weixin, the minister of housing and urban-rural development, said all but one of the 35 biggest mainland cities had introduced limits on homebuying since the government announced its crackdown in January.

Home sales in some major cities tumbled one week after the crackdown on the purchase of third homes, according to Soufun, the biggest property website in the mainland. Sales in Hangzhou plunged 73 per cent, while buying was down 59 per cent in Chengdu, 56 per cent in Tianjin, 50 per cent in Beijing, and 37 per cent in Guangzhou.