Property shares tumble amid dashed hopes
Mainland property stocks ended an eight-day winning streak yesterday after officials quashed speculation about looser controls on real estate investment.
The Shanghai Stock Exchange's real estate index sank 2.99 per cent to 3,125.61 amid panic selling by investors who were battered by the Shanghai government's statement that clarified the city's stance on property curbs.
The benchmark Shanghai Composite Index shed 0.95 per cent to 2,428.49 following a 4 per cent gain during an eight-day rally.
The official Shanghai Securities News reported last weekend that the municipality would allow non-locals to buy a second flat, a move that could boost the sluggish housing market.
The city government said on Tuesday that no policy change had been made and confirmed only that Shanghai residents would be allowed to buy a second apartment.
The denial of the report dampened investors' early hopes that property policies were easing, and would revitalise trading.
Shanghai unveiled policies to curb home purchases in February last year, restricting local and non-local residents from buying flats under directives of the central government.
Local residents were barred from buying a third apartment while non-locals could only buy one apartment in the city.
The cooling measures largely dragged the housing market down as developers offered huge discounts to boost sales. Last year, home sales in the city were 43 per cent below the annual average for the past five years.
'The previous market rally was a result of optimistic predictions that the restrictions would be eased,' said Shenyin Wanguo Securities analyst Li Xiaoxuan.
'But the statement on late Tuesday proved that the rally couldn't be sustained without substantial policies,' Li said.
Shanghai-listed Poly Real Estate, the second-largest publicly traded property developer on the mainland, sank 3.3 per cent to 11.10 yuan yesterday.
On the Shenzhen Stock Exchange, China Vanke, the country's largest listed developer, lost 2.8 per cent to 8.28 yuan.Local governments have shown some willingness to loosen controls amid the lacklustre market in the hopes of collecting more proceeds from land sales.
But the central government has a final say in policy adjustments.
On February 12, Premier Wen Jiabao said Beijing would not waver on property controls as he was determined to bring housing prices down to a reasonable level.