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.
Cooling policies to slow home sales
Developer Vincent Lo says latest mainland measures will deter property buyers
The mainland's property curbs in the past decade have been unsuccessful, but the new round of measures will slow property sales, said Vincent Lo Hong-sui, a member of the Chinese People's Political Consultative Conference.
"Certainly they haven't been," said Lo, the chairman of Shui On Land, a Shanghai-based developer, in Beijing on Wednesday. "Had they been successful, home prices wouldn't have risen higher the more the government curbed."
The central government on March 1 imposed its toughest curbs in a year, ordering the central bank to raise down-payment requirements and interest rates for second mortgages in cities with excessive price gains, enforcing a property sales tax, and telling local governments with the biggest price pressures to tighten home-purchase limits.
It ordered individuals selling properties to pay a 20 per cent tax on the sale profit when the original purchase price is available, a levy that is being easily avoided.
The new measures would slow property sales immediately because the 20 per cent tax was not that easy to bear, Lo said.
The new administration should build more social housing to boost supply, because that was the best way to curb the market, he said, and should leave luxury home prices to the market.
Developers benefited as homebuyers rushed to buy properties after interest rates were cut, spurring a rebound in prices in the second half of last year. China Vanke, the nation's biggest developer that trades on mainland exchanges outside of Hong Kong, said sales rose 28 per cent last month after increasing 56 per cent in January from a year earlier, while Shimao Property said sales rose 60 per cent last month from a year earlier.
Shares of Shui On fell 1.4 per cent to HK$3.46 yesterday, bringing its loss this year to 7.7 per cent.
The government kept housing prices from rising too quickly, outgoing Premier Wen Jiabao said in his work paper at the beginning of the National People's Congress this week in Beijing at the end of which he will be replaced by Li Keqiang.
Residential property prices climbed 50 per cent during Wen's last five-year term to the highest since the mainland privatised home ownership in 1998.
Home prices rose last month for the ninth consecutive month, according to real estate website SouFun.