Macro-economic controls imposed to cool down the housing market, especially high-end properties, are beginning to bite, according to a survey released yesterday.
The year-on-year growth of the average price of new units in 70 cities declined from 5.8 per cent in June to 5.5 per cent in August.
The joint findings were announced by the National Development and Reform Commission (NDRC), the country's top economic planner, and the National Bureau of Statistics (NBS).
Coinciding with that report was a central bank survey released yesterday of 20,000 customers in 50 cities showing "a continuous decline in enthusiasm in housing purchases," which is in contrast with rising spending and savings.
That mood was starkly reflected in Shanghai, the frontrunner in the country's luxury property market, where average prices fell 5.4 per cent in June, 3.5 per cent in July, and 2.2 per cent in August.
In Shenzhen, the South China manufacturing hub, prices dipped but were still in double figures: 14.6 per cent in June to 12.8 per cent in August.
Beijing seemed to buck the trend with increases of more than 11 per cent in all three months.
Industry observers said that the central government's new housing policies, adopted in May, may be working albeit slowly and are yet to have an impact in some major cities.
According to measures which went into effect on June 1, the minimum down payment for a new apartment larger than 90 square metres was raised from 20 per cent to 30 per cent of the unit price.
Also, a transaction tax is imposed on owners attempting to resell their units within five years of purchase, compared to the previous two years.
Housing developers are required to build more units smaller than 90 square metres.
From a long-term perspective, the continuous price rise in the urban property market is not surprising, James Jao, CEO of J. A. O. Design International and an expert on the property market, told China Daily.
There is huge pent-up demand, said Jao, pointing out that between 1949 and 1989, housing supply increased only 40 per cent while the population grew two-and-half times from about 400 million to 1 billion. The current figure is around 1.3 billion
Yan Jinming, a professor in land management at Renmin University of China, told China Daily that the country was "in bad need" of affordable housing for lower-income people; and that building of luxury housing should not be a priority.
Control measures do work if implemented aggressively enough, Yan said, citing the Shanghai market as an example. They are not being enforced as effectively in Beijing, he said.
(China Daily 09/14/2006 page1)
