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Many Property Buyers 'Delaying' their Purchases
May 18,2010 09:13CST
data analysis

BEIJING, May 18 -- The series of strict measures rolled out by the authorities to rein in soaring property prices over the past month seem to have only delayed purchases by potential buyers in most urban areas, latest statistics have showed.

Housing prices in 70 large to medium-sized cities nationwide grew 12.8 percent year on year in April, figures from the National Bureau of Statistics showed.

In Beijing, property prices grew by 14.7 percent in April year on year, peaking in the past 10 months, while the total floor space sold dropped to less than 1.2 million square meters, about 41 percent less than in March, statistics from the capital's statistics bureau showed.

The average housing price inside Beijing's fourth ring road from January to April reached 34,112 yuan ($5,016) per square meter, it said.

Housing prices in many other large cities like Shenzhen, Guangzhou and Shanghai are also on the rise, despite severe price control policies like property tax.

In April, the selling price of newly-built commodity houses in Shenzhen reached 20,567 yuan per square meter, a year-on-year increase of about 67 percent, while the total area sold in the city dropped to 291,200 square meters, a year-on-year decrease of about 61 percent, statistics from the Shenzhen bureau of land and resources showed.

Zhang Xiuhua, CEO of the Shanghai-based Fortune-Sun Reality Consultant Co Ltd, said housing prices in Shanghai are not falling as expected and the macro-control policies have only restrained transactions, with only 71,000 square meters of real estate sold during the first week in May, about 35 percent less than the previous week.

Other than first-tier cities, property prices in second- and third-tier cities are also increasing slightly, attracting speculative homebuyers to avoid the strict macro-control policies.

Chen Long, an analyst from the Wuhan Efang Research Center, said the average transaction price in the downtown area of Wuhan, capital of Hubei province, reached 6,640 yuan per square meter from May 6 to May 12, about a 0.33 percent increase from the previous week. The number of houses sold dropped 233, about 23 percent less than those of the previous week.

Chen said most property developers are not planning to offer any discounts on housing prices and most potential homebuyers are adopting a wait-and-see attitude at the moment.

During the recent May Day holiday period, total transactions in Hangzhou, capital of Zhejiang province, was less than 10 units, but second-hand houses downtown hit a record 20,000 yuan per square meter in April, statistics from realty company Centaline Group showed.

Relatively low housing prices and relatively free policies have also attracted speculative property buyers to invest in second- and third-tier cities, industry figures showed.

The authorities should ban buyers from purchasing property outside of their place of residence, said Li Chunyu, director of the market research department with the Kunming Hefuhuihuang Real Estate Co Ltd.

About 60 percent of respondents in a survey by the major portal sina.com said they think housing prices will fall following the government's strict control measures, while 30 percent of those polled thought otherwise.

Electricity in a number of houses in 660 cities has not been used for more than six months, indicating an unexpectedly high vacancy rate in the country, according to recent records from the State Grid.

Macro control policy
real estate industry

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