China’s property market has surged in recent years. After prices jumped 25 per cent in 2009 alone, the central government imposed austerity measures, including lending curbs, higher mortgage rates and restrictions on the number of homes each family can buy.
China home sales set to fall 50pc after new curbs
Sales may plunge by as much as 50 per cent this month, after mainland cities unveil local cooling measures designed to curb price growth
Home sales across mainland cities this month are expected to drop as much as 50 per cent from last month, after local authorities announced detailed measures to cool the property market.
Whether or not there will be an accompanying drop in home prices will depend on how municipal governments implement the measures, according to analysts.
As of the end of last month, mainland cities such as Beijing, Shanghai, Chongqing, Xiamen, Hefei, Tianjin, Guangzhou and Shenzhen had met a central government deadline on issuing detailed property-cooling measures.
Beijing, Shanghai and Chongqing announced tougher measures while other cities' policies are relatively loose, said Zhang Dawei, research director at property agent Centaline Property Agency's mainland division.
"No matter whether they unveiled very tough or relatively loose measures, it will hit buying sentiment," said Zhang. He expects sales transactions to drop as much as 50 per cent from those of last month.
Attempts to rein in the housing sector caused a frenzy of home sales last month. For example, sales of second-hand homes in Beijing jumped 332 per cent, compared to February, to 43,780 units, according to 5i5j Real Estate.
Average prices of new homes in 100 major cities rose 1.06 per cent month on month in March, having risen for 10 consecutive months, the China Index Academy said.
Average prices went up 3.9 per cent year on year, the Academy said. In February, home prices rose 2.48 per cent.
Agents generally expect home prices to stabilise now that the detailed measures have been announced.
"It depends on how the local governments implement the measures," said Zhang.
If the local governments strictly carry out those measures, prices may drop, he said.
Yang Hongxu, the research director at consultancy E-house (China), wrote on his microblog yesterday that Beijing and Shanghai had clearly stated that a 20 per cent capital gains tax would be imposed on second-hand homes.
Measures from other cities were less stringent. Yang said, therefore, he did not ex- pect the measures to have a big impact on the price of homes.
Guangzhou announced new policies on Sunday night, the deadline set by the central government to unveil price targets and measures to cool home prices. The Guangzhou regulations did not mention detailed measures to limit property prices. But a city official told mainland media that the government would strictly implement the 20 per cent tax on capital gains from property sales.
Shenzhen did not explain how it would implement the 20 per cent tax.