Price rises spur new curbs in Zhengzhou

While further tightening by central government is unlikely, Henan capital introduces tougher measures after a 2.38pc gain in home prices

PUBLISHED : Tuesday, 03 September, 2013, 12:00am
UPDATED : Tuesday, 03 September, 2013, 3:34am

Zhengzhou yesterday introduced tougher measures for the property market despite the general expectation that the central government would refrain from any more tightening of the sector amid an economic slowdown.

The capital of Henan province said it would bar people without residency permits who have lived in the city for less than three years from buying second homes. It would also prohibit residents under the age of 20 from buying any property, the city's Housing Bureau said in a statement on its Sina Weibo microblog.

The measures come after the city saw a 2.38 per cent month-on-month gain in new home prices to 8,811 yuan (HK$11,070) per square metre in August.

New home prices on the mainland rose the most last month since December on growing expectation that the central government was unlikely to further tighten the property market, according to real estate website SouFun.

In SouFun's survey of 100 cities, average prices jumped 8.61 per cent year on year to 10,442 yuan per square metre in August. On a month-on-month basis, they grew on average 0.92 per cent.

"Prices of new homes will continue to increase as September and October are traditionally the peak seasons in the real estate market," said Thomas Lam, head of research and consultancy, Greater China, at property consultancy Knight Frank.

He predicted prices in major cities would jump 10 per cent this year as the central authorities were unlikely to introduce any more measures to cool the market. "Given the slow economy, the central government will tolerate the price growth rather than introducing harsher policies," he said.

Led by gains in inner cities, SouFun said, 71 cities reported higher prices last month from July, while 29 cities saw a decline.

Developers have benefited as home flock to the primary market

Fuzhou recorded a 3.92 per cent month-on-month increase to an average of 15,173 yuan per square metre while Xuzhou rose 3.66 per cent to 6,200 yuan per square metre. Beijing was up 3.22 per cent to 25,000 yuan per square metre.

Lam said prices also rose because of the 20 per cent capital gains tax on the secondary market, which came into effect on April 1.

"Developers have benefited from the tax policy as home seekers are flocking to the primary market," he said.

He said most developers would exceed their sales target this year as they had already locked in 70 to 80 per cent of their targets.

The positive market outlook also stems from aggressive land acquisitions by developers in several cities.

But new home prices in Wenzhou and Haikou fell more than 10 per cent last month from a year earlier, while those in Sanya in Hainan, Zhangjiagang and Jiangyin in Jiangsu, and Guiyang in Guizhou dropped 1 to 8 per cent.