Advertisement
Advertisement
China property
Get more with myNEWS
A personalised news feed of stories that matter to you
Learn more
Beijing’s new home sales last week slumped 10 per cent over the same period a year ago, while pre-owned homes sale fell 35 per cent. Photo: Bloomberg

Beijing’s heavy hand in curbing rising home prices may extend to price caps

Speculation points to 80,000 yuan per metre price cap on new Beijing homes

Speculation of an 80,000 yuan per square metre price cap on Beijing homes has raised the prospect of further policy tightening in the nation’s capital, which would extend the local government’s hand in the market to determining how much a home should be sold for.

Several Chinese media have reported since Tuesday that Beijing’s city government imposed the 80,000 yuan cap on “finished new homes”(現房) after the Lunar New Year, citing developers as the source. However, a media report on Monday said the cap only applied to Chaoyang district.

The Beijing Municipal Commission of Housing and Urban-rural Development didn’t respond to questions from the South China Morning Post on the matter. An executive with China Vanke’s Beijing office, who declined to be identified, said the commission did inform them that the policy on finished new homes would be tightened, but he was not aware of the 80,000 yuan price cap. An executive with Thaihot Group said he was also not aware of the cap.

Unlike unfinished new homes(期房), which make up the majority of China’s commodity home market, finished new homes used to enjoy much more lax price regulations because selling finished homes lengthens the developers’ capital recovery period. Chinese developers’ prefer a high turnover strategy that enables them to collect funds while construction is underway.

As a result, some developers opted to register to sell finished homes as they complained about the tight government controls on unfinished homes. Local governments have long been manipulating new home prices by not granting presale permits to developers. The exact acceptable price, however, is vague and changes all the time.

Guo Yi, marketing head at Yahao Real Estate, a Beijing consultancy that specialises in high-end and luxury properties, said since last October, when Beijing introduced a series of cooling measures, the issuing of sale permits for both unfinished and finished homes has been tightened. However, she doesn’t know whether a specific limit, 80,000 yuan has been imposed.

Information on the Beijing housing commission’s website shows that since the start ofFebruary prices for unfinished new home projects that were approved were no higher than 78,200 yuan.

The latest finished home project, approved on December 22 in Chaoyang, registered a 78,800 yuan per square metre selling price. It’s not clear whether the price had been deliberately been set under 80,000 yuan.

If there is a new specified upper limit, what’s at stake are several high-end residential projects from developers that acquired the land at record prices, meaning under current regulations they won’t make profits, or could even incur losses, or won’t be able to sell the finished apartments due to lack of permits.

“The result is less new home supply. Homebuyers can only turn to the pre-owned home market, whose prices are set to rise,” said Gao.

The latest restriction comes on the heels of tighter mortgage policies. Banks in the capital city have been asked to offer mortgage discounts no more than 10 per cent off the benchmark rate, and second-time buyers have to pay off loans within 25 years, instead of 30 years.

Beijing’s new home sales last week slumped 10 per cent over the same period a year ago, while pre-owned homes sale fell 35 per cent, according to Yahao.

The flurry of measures are being implemented to achieve Beijing mayor Cai Qi’s earlier promise to ensure home prices won’t rise in 2017, analysts said.

Post