More cities see home prices drop orremain unchanged as policies bite
BEIJING - More cities reported lower or unchanged realestate prices in August than in July, the NationalBureau of Statistics (NBS) said on Sept 18, in the latestsign that government efforts to cool the market areworking.
Property prices in August in 46 out of 70 monitoredmajor cities declined or stayed flat. Just 31 citiesreported similar market conditions in July, according tothe NBS.
Property prices for new homes dropped in 16 cities inAugust, up from 14 in July.
Thirty cities, including Beijing, Shanghai, Guangzhouand Shenzhen, saw property prices remain unchanged,according to the NBS.
The figures mean that for two months running, July andAugust, the top four cities saw unchanged propertyprices, a clear indication that tightening measures havehad consequences.
"Property prices may fall in the next 12 to 18 months asthe government's rigorous real estate measurescontinue," said Vincent Lo, chairman of Shui On LandLtd, a major property developer in Hong Kong.
Premier Wen Jiabao said at the opening of the 2011 "Summer Davos" held in Dalian last week that thecountry will maintain its prudent monetary policy as theeconomy is moving in the right direction.
This indicates that the government is not likely to ease real estate policies despite the globaleconomic outlook, Lo said. Real estate is a key driving force behind China's economy.
"The tightening of bank loans and expanded home-purchase restrictions will see propertydevelopers face cash flow problems and this will finally prompt them to cut prices," Lo said.
The government has started to prepare home-purchase restrictions in second- and third-tiercities to prevent price increases.
Previously, the government restricted residents in major cities, such as Beijing and Shanghai,from buying second or third homes. Homebuyers were also required to pay higher downpayments for mortgages. Property taxes have been levied in Chongqing and Shanghai.
Qin Hong, deputy director of the Ministry of Housing and Urban-Rural Development's policyresearch center, said at a recent forum that bank lending to developers has reached a recordlow.
"Property sales in first- and second-tier cities will experience negative year-on-year growth for2011", and may decline further in the second half of the year, Qin said.
During the three-day Mid-Autumn Festival holiday earlier this month only 407 contracts werecompleted for residential apartments in Beijing. This represented a 70-percent drop comparedto the three-day holiday in May, and a 50-percent decline from the corresponding period lastyear, according to the Beijing municipal commission of housing and urban-rural development.
September and October are traditionally busy periods for property sales.
Chen Zhi, deputy secretary-general of the Beijing Real Estate Association, said that theshrinking volume signals a cooling market.
Property developers, meanwhile, have taken different measures to deal with the sluggishmarket.
Cheung Kong Real Estate Limited will extend the time a customer needs to make a downpayment to ease their cash flow concerns, director William Kwok said.
"For our new project in Beijing, the customer can pay 20 percent of the down payment whensigning the contract, and then pay the remainder before the villa is delivered," said Kwok. "Theperiod could be as long as two years, as opposed to the current one week."
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