List could end property curbs

PUBLISHED : Saturday, 28 January, 2012, 12:00am
UPDATED : Saturday, 28 January, 2012, 12:00am


The central government is setting up a national database on individual property ownership, raising hopes that curbs on homebuying will be removed, allowing transaction volumes to rebound.

The database, covering 40 key cities, will come on stream by June and allow the government to monitor and control speculation more effectively. Provinces have similar databases of their own, but as they are not centrally linked, big speculators can get away with buying multiple properties in different provinces.

The minister of housing and urban township construction, Jiang Weixin, said the system would enhance transparency in property transactions. 'This is an important step towards strengthening and improving real-estate regulation.'

Jiang had earlier said the home purchase limits now in place were the last resort to curb runaway property prices and would be phased out after the national database on individual property ownership was established.

Forty-six cities, including Beijing, Shanghai and Guangzhou, now limit buyers to two flats.

Analysts were upbeat at news that the database would be set up by June, saying it would eliminate the need for purchase restrictions and help raise transaction volumes.

'This is good news, as the database will better track and check speculative demand,' said Lee Wee Liat, regional head of property research at Samsung Securities (Asia).

Eric Yuen Chi-fung, head of research at brokerage house Guoco Capital, echoed Lee's view, saying property sales would be boosted if the curbs were removed. 'But the first half of this year will still be a tough time for developers as property sales will remain slow.'

In the past couple of years, Beijing has reduced the amount of money banks can loan homebuyers, stopped people buying more than two homes, and raised mortgage rates and down-payment requirements to rein in prices. As a result, home sales have plunged as much as 70 per cent in the past 19 months.

Figures from the National Bureau of Statistics on Wednesday showed that only two out of 70 cities recorded price gains for newly built homes last month, the worst performance for new properties last year.

Agents said that the first batch of 40 key cities to join the database would include Beijing, Shanghai, Tianjin and Chongqing.

The central government also plans to finalise plans to roll out new property taxes in other cities after evaluating the impact of pilot programmes in Chongqing and Shanghai, with the aim of phasing out the current curbs on property purchases.

He Keng, a deputy director of the Financial and Economic Affairs Committee of the National People's Congress, said yesterday that prices needed to fall another 30 per cent to reach a 'reasonable' level.

Samsung Securities' Lee expects prices to fall an average of 15 per cent this year. 'A 30 per cent fall across the board for all cities for all property types within a year would simply be too drastic. In a lot of tier-two cities, the house-price-to-income ratio is at [a reasonable] six times. Not all cities are overpriced,' he said.

Shares of major mainland property stocks fell across the board yesterday as investors took profit.

Shares of KWG Property fell 8.9 per cent to close at HK$3.36, Shimao Property dropped 3.38 per cent to HK$8.55 and Agile Property lost 3.77 per cent to close at HK$9.18.