Mixed reports on holiday weekend sales
Home sales were mixed on the mainland over the May Day weekend, with Shenzhen and Guangzhou recording buying interest after developers offered big discounts, but demand in other cities remained low.
Unconcerned by renewed fears that the government may impose further austerity measures to cool demand, potential buyers were lured to view projects offered at bargain prices in Shenzhen and Guangzhou.
Last Wednesday, the central government said it would study the costs and earnings of property projects in a bid to curb 'excessive profit' made by developers - sparking concerns that a new round of austerity measures may be in the pipeline.
Sentiment took a further knock yesterday after the China News Agency reported that banks may this month increase the initial down payment required from first-time home buyers in order to secure a home loan to 50 per cent of the purchase price, from the present 30 per cent.
But buyers responded positively to the second-phase launch by China Overseas Land and Investment of its Olympic City residences, in Longgang, Shenzhen, at prices cut by up to 20 per cent last Saturday, the start of the May Day holiday weekend.
The developer reported that nearly 5,000 potential buyers came to view the project and it sold more than 1,300 flats at an average price of 11,000 yuan (HK$13,145) per square metre, compared to the previous launch's 14,000 yuan per square metre.
'But Coli's fire sale result was an individual case. Overall, sales over the long weekend were unexciting,' said Samuel Wong, a director at Midland China's Shenzhen branch. Wong expects sales to rebound once other developers follow suit.
'Housing demand in Shenzhen remains strong,' he said.
In Guangzhou, Hexun.com reported, long queues developed outside the sales office of Country Garden Holdings last Saturday when it launched Phoenix City at 7,000 yuan per square metre - about 15 per cent lower than last year's selling price. On the first day, more than 600 flats were sold for 800 million yuan.
However, property sales in Beijing and Shanghai stalled as developers either deferred launches, partly due to new rules on marketing, or were reluctant to discount prices.
'The new rule aims to control price growth as developers are prohibited from raising their selling prices,' said Alan Chiang Sheung-lai, head of residential at property consultant DTZ on the mainland.
Developers are required to release all flats available for sale in one development phase, with clearly-marked prices as a way to increase supply and transparency, he said.
The new regulation requires home sellers to make public the sale price of every unit and the number of apartments for sale in a phase.
In Beijing, the number of projects put on sale dropped sharply during the May Day holiday.
According to a survey by Beijing Yahao Real Estate Agency, only 10 projects were released on the market as of April 30 - 34 had been scheduled to be launched.
But the agency expects developers will now speed up the marketing of new projects.
Kenneth Pak Kei-yuen, a senior general manager in the Beijing office of Hong Kong estate agency Midland Realty, said developers decided to defer launches as the new rule requires them to seek central government approval if they plan to offer flats at prices that are higher than those charged in previous launches.
Demand has also been suppressed by new limits on the number of homes that individuals can own, and Beijing's requirement that non-local residents prove they have paid taxes in the city for five years before they can buy a home there.
In Shanghai, developers offered discounts for projects at secondary locations but failed to lure wary home buyers to the market. 'Most home buyers adopted a wait-and-see attitude as the market is still clouded by uncertainties,' said an agent.