Although quality projects on the mainland are still popular, experts are cautious about the prospect, as there are no signs of a loosening of policies and the central government looks eager to suppress inflation with further credit control initiatives. Not only is the financing of developers being restricted, homebuyers are also faced with higher interest rates for mortgages.
Alan Chiang, director at DTZ, says demand for luxury homes in Shanghai remains positive with strong sales recorded for selected new projects. In the city's primary market, Yanlord Townhouse sold 80 units over the past five months, with prices exceeding 70,000 yuan (HK$84,000) per square metre. Shui On Land sold four super-deluxe homes at Casa Lakeville in Xintiandi at prices up to 150,000 yuan per square metre.
'It is possible to see some cities relax their home purchase controls in about a year's time. But cautious sentiment is likely to prevail until early next year,' he says, adding that the supply of new luxury homes in major cities has decreased substantially due to local governments' tight supervision on presale consent applications from developers. 'Luxury home transactions in Beijing dropped by 4 per cent in the first four months, but prices edged up moderately. In Shenzhen, luxury prices fell by 6 per cent after a 28 per cent decline in transaction volume during the period.'
Thomas Lam, director and head of research for Greater China at Knight Frank, says most major mainland cities have seen declines in the total areas of new homes sold in the primary market. 'The market is now in a period of cooling down and consolidation. Home prices have remained firm on low transaction volume in the first four months of the year. Developers are mostly rich in cash and they see no rush in selling new homes at this stage,' he says.