NewChina’s home sales decline as government’s market-cooling measures take effect

Since the end of September, as many as 22 Chinese cities have imposed administrative measures to raise down payments and barred non-resident purchases

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A new apartment complex being launched in Jilin province in northeastern China. Photo: SCMP

Published: 9:26am, 19 Oct 2016

China’s home sales declined during the first two weeks of October, according to a survey, in a sign that government policies aimed at cooling the real estate market are taking effect.

Sales volume in 54 cities in mainland China fell as much as 40 per cent from a year ago, while the total number of transactions declined 5 per cent to 130,944 units, according to Centaline Group.

“The tightening policies have dampened buying desires,” said Zhang Dawai, chief analyst at Centaline.

As many as 22 Chinese cities -- including Beijing, Shanghai and Shenzhen -- have imposed a slew of market-cooling administrative measures since September 30 to raise the down payment required on homes, while barring non-resident buyers from buying property.

“The fall in sales volume will add to pressure for prices to adjust downwards,” Zhang said. “It will also extend to more cities if the central bank further tightens the lending policies.”

China’s property prices had been surging, especially in the so-called first, second and third-tier cities, as easy loans combined with limited investment options to drive speculative capital into apartments and luxury villas. As prices surged in the biggest cities, speculators have flocked to smaller metropolitan areas like Hangzhou, Suzhou and Hefei to look for bargains, in turn driving up prices in these areas by as much as 40 per cent during the past 12 months.

The smart money is now pouring into cities with less restrictive measures such as Jiaxing, about 30 minutes via high-speed train from downtown Shanghai, according to JLL’s research head Joe Zhou.

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Since the end of September, as many as 22 Chinese cities have imposed administrative measures to raise down payments and barred non-resident purchases

Since the end of September, as many as 22 Chinese cities have imposed administrative measures to raise down payments and barred non-resident purchases