Nanjing scraps home purchase curbs

Nanjing has become the latest mainland city to remove property curbs in a move to boost the struggling market, but the rights issue offering of Agile Property Holdings has led to a fall in mainland property shares.

The Nanjing city government announced the removal of the measures on Sunday as it declared it would provide lending support to meet growing demand from first-time home buyers.

In the circular, the city government set the target for annual land supply to at least 500 hectares to stabilise the market.

Nanjing's decision leaves just six cities out of the 47 that have yet to ease the curbs put in place by the government to cool the once-hot property market. The cities are Beijing, Shanghai, Guangzhou, Shenzhen, Zhuhai and Sanya.

Home prices in Nanjing fell 0.6 per cent month on month in June, ending a 24-month streak when prices rose in the city. Prices again fell 1.1 per cent in July and 1.3 per cent in August, according to the Shanghai Securities News.

Sales dropped substantially as well. Among the 10 projects launched in September, three managed to sell 70 per cent of their units, according to mainland website House365.com. But some projects have not been able to sell even 20 per cent of their units since launch.

As of September 21, the city had an inventory of 51,200 flats which will take nine months to clear, reported the Shanghai Securities News. Mainland local governments began to relax restrictions on buying flats in April. Although the restrictions in most second and third-tier cities have been relaxed, it did not stop the fall in property prices across the mainland.

Sixty-eight of the 70 cities monitored by the National Bureau of Statistics recorded falls in property prices last month, the highest number since research started in January 2011. In July, 64 cities saw prices fall. The poor property sales have prompted mainland developers to raise funds in the financial market.

Separately, Agile Property Holdings yesterday announced it plans to raise about HK$2.79 billion in a rights issue to bolster its financial position in the third such share issue in the past month by a major Hong Kong-listed mainland developer.

Agile will issue one rights share at a subscription price of HK$4 each, for every five existing shares held, the company said in a filing to the Hong Kong stock exchange yesterday. The price represents a 31 per cent discount to the closing price of HK$5.81 on Friday.

Its shares plunged 7.23 per cent to close at HK$5.39 yesterday, the biggest drop in almost three years after it announced the rights issue offering. It put pressure on shares of Greentown China Holdings and Guangzhou R&F Properties, which declined by 5.06 and 4.44 per cent to close yesterday at HK$7.50 and HK$8.17 respectively.

Agile said it would use the proceeds to refinance debt and bolster general working capital.

"The directors consider that the rights issue would provide an opportunity for existing shareholders to participate in the future development of the group, and to strengthen the capital base and the financial position of the group," it said.