Survey shows Chinese can afford to pay more for homes

To gauge the buying demand of mainland Chinese for domestic and overseas residential property, the South China Morning Post and consultancy Century 21 China Real Estate have partnered on a quarterly sentiment survey.

In the fourth poll, conducted in the fourth quarter in Beijing and Shanghai, 274 Century 21 clients responded, compared with 484 in the third quarter, 565 in the second and 350 in the first.

The latest survey indicated homebuying interest remained unchanged in the fourth quarter from three months earlier, but a higher proportion of respondents said they could afford to buy homes priced above 30,000 yuan (HK$37,400) per square metre.

Most Chinese cities have removed restrictions against multiple home purchases to stimulate demand, but not the first-tier cities of Beijing, Shanghai, Shenzhen and Guangzhou.

Banks have gradually started to offer easier and cheaper mortgage loans after an interest rate cut by the central bank in November, the first in more than two years.

Such policies have drawn homebuyers back into the market, particularly those who want to trade up their small homes for bigger ones.

Home prices and transactions have shown some signs of a pickup in recent months.

However, some analysts said that with the slowing economy affecting people's expectation on increases in their income, the impact of policy relaxation would be limited.

While an increasing number of wealthy mainland Chinese families are buying homes abroad, the survey showed that interest in doing so was not strong among ordinary households, despite the recent relaxation of visa rules for mainland Chinese visiting the United States.

The White House last year announced that Chinese visas would be extended from one year to 10 years.

Results on domestic demand

1) Do you plan to buy a home in the next three months?

Yes: 3 per cent (against 3 per cent in third quarter).

2) What is the price you can afford and what is the price of projects you are looking at now?

Thirty-four per cent (46 per cent) said they could afford less than 30,000 yuan (HK$37,400) per square metre, while 33 per cent (46 per cent) said they were looking at projects below that price.

3) Do you own a home and do you plan to sell it in order to buy a new one?

Eighty per cent (94 per cent) said they owned a home and 31 per cent (51 per cent) said they would sell it to buy a new one.

Results on overseas demand

1) Do you plan to buy a home abroad in the next three months?

Yes: none (against 0.2 per cent in the third quarter).

2) Why would you buy a home abroad?

Fifty-two per cent (39 per cent) cited their children's education for making such a decision, while 35 per cent (40 per cent) said it would be for emigration and 13 per cent (21 per cent) would do so for investment.

3) What is your main concern about buying abroad?

Forty-three per cent (35 per cent) said policy issues would be their main concern, while 47 per cent (32 per cent) said property prices would be their main worry.