Zhongshan sets price limit for home sales

PUBLISHED : Friday, 11 November, 2011, 12:00am
UPDATED : Friday, 11 November, 2011, 12:00am


Zhongshan, in Guangdong province, yesterday suspended the registration of homes sold at or above a set limit, effectively cancelling the sales.

The suspension, on sales of 5,800 yuan (HK$7,112) per square metre or above, is another example of local governments following Beijing's directive to curb the rise in property prices. Without registration, no sale can go through.

Zhongshan's ceiling on residential prices will last until December 31, according to a statement posted on the city government's website.

The 5,800 yuan limit is lower than the average transaction price in the city of 6,000 yuan per square metre.

Last week, Zhuhai became the first city to set a ceiling on residential prices, the strongest tightening measure yet seen in the property market. The city set the limit at 11,285 yuan per square metre. It did not say how long the curb would stay in place.

'Obviously, local governments would like to show the central authorities that they are doing something to control price growth,' said Alan Chiang Sheung-lai, the head of residential for greater China at property consultant DTZ. 'Such administrative measures will definitely achieve lower transaction prices in the short term as no units can be offered for sale at more than 5,800 yuan per square metre.'

Home prices in Zhongshan have risen 14 per cent from a year ago, higher than the municipal government's targeted growth limit of 11 per cent.

Chiang expects sales to drop, particularly in the high-end segment, as developers hold off putting their projects on the market until next year.

Shares of major mainland developers fell across the board yesterday as the Hang Seng Index closed 5.25 per cent lower, its biggest loss in three months.

Agile Property Holdings declined 8.84 per cent to close at HK$6.29 while China Overseas Land & Investment dropped 4.87 per cent to HK$13.28. Both developers are building high-end residential projects in Zhongshan.

Zhuhai and Zhongshan's moves came after Premier Wen Jiabao said this month that local authorities should continue to 'strictly implement the central government's real estate policies in the coming months to let citizens see the results of the curbs'.

Property agents said the price ceilings would boost sales at the low end of the residential market. Developers are expected to focus on offering homes in outlying areas, where prices are below 5,800 yuan per square metre.