Foshan housing market streaks higher despite curbs
Home prices in Foshan continue to rise after a 43 per cent jump in the past year, in spite of government curbs to limit speculative investment
Prospective home buyers flocked to an Evergrande housing project in Foshan, a mid-sized city close to Guangzhou, on the weekend, indicating that optimism towards the residential market remains buoyant in spite of recent home buying restrictions.
On Friday afternoon, the sales office of Evergrande Joy Town near Qiandeng Lake in the Nanhai District of Foshan attracted dozens of prospective buyers in what was largely an information gathering exercise.
Since phase 1 of the development sold out in a single day on May 30, with as many as 906 units being snapped up, the developer has yet to give a formal indication when the next batch of flats in phase II will be released.
Zhang Peng, a 30-year-old public servant, brought his fiancee to the site, saying he wanted to buy an apartment near his office as he would get married soon.
“Joy Town is the only new project available in the whole Qiandeng Lake area,” he said. “Though I think it’s quite expensive, there’s no choice, so we just come to have a look.”
Owing to government price controls, the project was priced at 20,000 yuan (US$2,934) per square metre. Wu Daoxiang, a research manager at Foshan Centaline Property Agency, said without the restrictions, prices would likely have shot up to 24,000 yuan per sq m.
The lower-than-expected selling prices led some buyers to pay a 50,000 yuan premium in order to secure a spot as an eligible buyer, Wu added.
The launch date of its phase II development is not known as the housing authorities haven’t granted the sales permit to the developer, a policy intended to ensure stable supply and slower growth in home prices.
New home prices in Foshan soared 43 per cent in the past year, with the average transaction price hitting 15,346 yuan per sq m, Anjuke data shows.
Foshan has tightened home purchase policies three times since October to cool off the overheated market.
In many parts of Foshan, non-local buyers must have paid one year of income tax or social security premiums, if they wish to buy a home, while local residents are not allowed to buy an apartment if they already own two homes. The policy tightening was further tightened to include homes sold in the secondary market as well as the primary market effective June 1.
Although transactions have declined, prices have remained strong as the current supply cannot absorb pent-up demand, especially as affluent buyers from Guangzhou look to buy a home in comparatively affordable Foshan.
Foshan’s housing inventory dropped to as low as 3.5 months as of the end of May, as many developers postponed their sales launch plans in a response to government price controls.
Wonder Bay, one of the most expensive projects in Nanhai-- selling at 23,500 yuan per sq m, has sold about 80 per cent of units to buyers from Guangzhou.
“We have no plans to cut prices, we are actually waiting for a good time to raise prices,” said Yan Qilun, a salesman at the site.
Travel time from Guangzhou - a city of more than 14 million - to Foshan now takes only 30 minutes thanks to the development of the Guangfo Metro Line, an intercity underground rail link.
Industry experts are bullish on Foshan’s property market, citing a booming economy, affordable prices and an easy commute to the neighbouring mega city of Guangzhou.
“Foshan is accelerating its urban infrastructure construction with more metro lines underway to connect Guangzhou,” said Long Bin, a real estate expert from the Guangzhou Real Estate Association.
“It has also been successfully in industrial upgrading, shifting towards service-oriented businesses, such as finance and convention, from traditional manufacturing.”
The landmark Qiandeng Lake Finance High-Tech Zone in Nanhai, has attracted a number of top-tier financial institutions to set up back offices, including AIA and HSBC.