New Beijing price-capped homes fail to excite homebuyers
Introduction of 20,000 such homes in the next few months could weigh on prices
Ten projects with 4,200 “price-capped” new homes have been approved for presales by the Beijing municipal commission of housing and urban-rural development since June, but have so far received a lukewarm reception.
These price-capped homes, a concept introduced last year as part of efforts to keep home prices in check, have lowered the minimum amount of money needed to buy a new home in Beijing to 3 million yuan (US$441,000). The selling prices of all new home projects are controlled by the commission, but builders of price-capped homes face an extra layer of control – they have to promise a specific low price when they acquire a plot. The owners of such homes too cannot sell these units within five years of buying them.
Zhang Dawei, an analyst with Centaline Group, said with 20,000 such units coming to the market in the next three months, “a supply shock will come in the second half of the year”.
“This will surely drag down the city’s average home prices,” he said, but added the five-year holding period might hold back buyers. About 45,000 price-capped new homes are expected for 2018 as a whole.
One of the projects available for presale, Grande Harmony Emerald Residence, which is being developed by mainland China-based real estate company Sino-Ocean Group Holdings and two other developers, is located in Beijing’s Daxing district. Outside the city’s fifth ring road and about 22km from the city centre, the project will be close to the under construction southernmost station of Beijing’s subway line 8, as well as a community centre that has a big park, a hospital and schools.
In compliance with a building policy that requires developers to keep at least 70 per cent of units below 90 square metres in area, considered small units in mainland China that are fit for first-time buyers, Sino-Ocean has built high-rise apartment blocks with 60, 80 and 90 square metre apartments. This has also allowed it to keep a bigger piece of land for town houses with areas larger than 200 square metres.
