Home sellers on mainland raise prices after holiday sales boom

Sellers ask for up to 10 per cent more after big increase in sales volume and prices in major mainland cities; some may be reluctant to do deals

PUBLISHED : Wednesday, 20 February, 2013, 12:00am
UPDATED : Wednesday, 20 February, 2013, 4:40am

The release of pent-up demand boosted home sales on the mainland during the week-long Lunar New Year holiday.

For prospective buyers the bad news is that developers will respond to signs of this strengthening demand by raising prices, say property consultants.

Data from the China Index Academy, a unit of SouFun Holdings, shows 21 of 27 cities recorded a rise in sales from February 4 to 17 compared with the same period last year, with average prices in 14 cities nearly doubling.

"Many owners in Beijing are becoming reluctant to sell quickly after seeing buying confidence return to the market and will wait to achieve higher prices," said Kenneth Pak Kei-yuen, a senior general manager in Midland Realty's Beijing office.

Some owners had already increased their asking prices by five to 10 per cent since the new year holiday, he said.

During the holiday, sales of new homes in Beijing rose 14 per cent compared with last year's holiday; secondary market sales rose 71 per cent year on year.

"The big increase in sales volume during the period was because of a low base for comparison a year ago," said Pak.

The low-base effect arose because early last year buying interest was adversely affected by the central government's imposition of a string of cooling measures, including restrictions on buying more than two homes, to curb demand and price growth.

The increased demand this month helped drive average home prices in Beijing up by 7.8 per cent from 23,345 yuan per square metre this time last year to 25,179 yuan per square metre. The main source of the strong demand, Pak said, was from end-users since investors had been eliminated from the market.

In Shanghai 41 second-hand flats changed hands, up from 26 a year ago. But sales of flats in Shenzhen fell, said Andy Lee Yiu-chi, head of Centaline Property Agency's Shenzhen branch.

On Monday, the first working day after the week-long Lunar New Year holiday, just 20 second-hand flats changed hands, versus 40 to 50 on a normal day.

Lee said it was unlikely the central government would impose tougher measures to curb demand for housing before the annual meetings in Beijing next month of the National People's Political Congress and the Chinese People's Political Consultative Conference.