Price and rate cuts lift sales of homes
Property sales on the mainland climbed significantly this month amid a lowering of mortgage rates at banks and steep price cuts by developers at new projects.
In Beijing, the moves released pent-up demand and drove new home sales 34.7 per cent higher to 1,743 in the first 10 days of the month against the same period last month, according to data from the Beijing Municipal Commission of Housing and Urban-Rural Development and estate agencies Centaline (China) and Wo Ai Wo Jia.
Meanwhile, in the city's secondary market, 2,911 sales - a twofold increase - were recorded over the period, the agencies said.
In Shanghai, according to data from the financial news website Hexun, sales of new homes from March 1 to 11 rose 159 per cent from the previous month.
Dickson Wong Hung, the chief executive at Centaline (China) for the north and southwest regions, said it had been difficult for home seekers to get mortgages last year after the banks cut back on property loans.
However, the situation has now changed, he said, as the banks have new quotas.
'Banks have made it easier to get a mortgage and have also lowered mortgage rates. Previously, the rate was about 8.8 per cent or higher. But in the past two months, the rate has fallen to less than 7 per cent,' Wong said.
Price cuts by developers at their projects have also brought buyers back into the market.
Albert Lau, the head of the China market for property consultancy Savills, said mainland developers had started cutting prices - which are now 20 to 30 per cent off their peak last year - to lure buyers.
Premier Wen Jiabao this week reaffirmed the central government's determination to continue implementing measures to push home prices back to a reasonable level.
Wong said sales in Beijing suburbs such as Daxing and Shunyi - favoured by first-time buyers - were the most active in the city.
'It's because developers are willing to cut their asking prices. Selling prices are 5 to 10 per cent lower than in the fourth quarter last year,' he said.
However, Lau believed the strong sales so far this month were not sustainable. 'The government's cooling measures in the property market are unlikely to change in the short run. Only first-time buyers are being supported,' he said.
Alan Chiang Sheung-lai, head of residential property on the mainland for property consultancy DTZ, said sales in many other cities had also rebounded as buyers responded to the price cuts.
Wong expected prices to continue falling owing to the new supply in the market. He forecast that total sales would be slightly higher than the 200,000 deals recorded last year.
Chiang said policy tightening would continue to put downward pressure on property prices.
'Property prices are falling to a reasonable level and price cuts in the primary market will continue. Also, there is increasing supply of small flats this year, which could attract more first-time home buyers,' he said.
The total amount of yuan loans extended to mainland property developers and first-time buyers last year