Property policies

Sanya developers told to freeze sales prices for six months

PUBLISHED : Thursday, 30 August, 2018, 8:45am
UPDATED : Thursday, 30 August, 2018, 8:47am

Sanya, China’s southern tropical resort city, has introduced the country’s harshest home price cap yet, asking developers to lower prices and freeze them for six months, under heightened pressure from Beijing.

The city becomes the second city in Hainan province, often dubbed “China’s Hawaii”, to demand developers adjust pre-approved prices after provincial capital Haikou made the move on Sunday.

The two cities were ranked as having the nation’s highest pace of price rises last month: 19 per cent and 16.5 per cent, respectively.

China’s new home prices in July rise at fastest pace in nearly two years

Developers in China have to register selling prices with local housing commissions, and have them approved before sales can open.

Major developers including Agile Property, China Evergrande Group, Country Garden and Sunac China have a large presence in Hainan.

The latest change, in force from Wednesday night, means developers will have to adjust their prices for registered but unsold homes before the end of September.

“This is apparently a result of Beijing pressure, after the Ministry of Housing and Urban-rural Development (on August 17) called in officials from the two cities to explain how they planned to control home price surges,” said Yan Yuejin, an analyst with E-house China R&D Institute.

Hainan province also introduced an unprecedented policy in late April banning non-locals from buying properties there after a speculative spree following the island being named as China’s largest current “free-trade zone”.

Non-locals cannot now buy homes in Haikou and Sanya unless they can provide official proof they have paid into the local social security fund for 60 months.

Hainan restricts property ownership options for non-locals

The policy dealt a heavy blow to an island that previously sold more than 80 per cent of its new housing stock to non-locals.

According to consultancy China Real Estate Information Corp (CRIC), Sanya’s home sales fell 46 per cent in July compared with last year, while in the first seven months transaction numbers fell 55 per cent, Most of the buyers were locals.

“The headline prices in Haikou and Sanya have surged fast in recent months but there haven’t been many transactions,” said Ding Zuyu, CRIC’s chief executive. “Nobody is actually buying.”