Economy

Real estate business volume slumps in Xi'an

By Ma Lie (China Daily)
Updated: 2010-06-05 07:11

XI'AN - Hu Minyuan, a 30-year-old resident of Xi'an, who is set to tie the knot in October, has deferred plans to buy a house due to the high real estate prices.

Instead, Hu and his bride-to-be will rent a house and wait for the right time to buy when prices drop considerably.

"I know the price of residential houses has been dipping since last month. But it's still much higher than I expected," Hu said.

"Many people like me, who earn about 3,000 yuan ($450) a month, cannot afford to buy a house right now."

The price and business volume of real estate in Xi'an, capital of Shaanxi province, went down in May, according to the latest information issued by the Xi'an Housing Administration bureau.

Statistics showed that a total of 998,400 square meters were sold in May, a 4.5-percent increase from the same period in 2009, but 30.7 percent less compared with the sales in April.

"Of the total business volume, 919,400 sq m were residential houses, 2.57 percent more than that in May 2009, but 30 percent less than that in April," according to statistics.

The average price of real estate in Xi'an went up from 5,541 yuan per sq m in January to 6,040 yuan in April, and down to 5,861 yuan in May.

Yang Donglang, director of the Real Estate Research Institute of Xi'an Jiaotong University, said the dip was the affect of the central government's adjustment and control policies on real estate prices.

From April 13 to May 31, the central government continuously issued a string of adjustment and control policies, including credit retrench and taxes (especially land value-added tax), strictly imposed to fight real estate speculation.

"From the statistics in Xi'an and other cities, we can see the effect of the policies on the real estate market," Yang said.

According to the monitoring data made by the China Index Academy, between May 24 and May 30, the business volume of real estate in large cities such as Beijing, Shanghai, Guangzhou and Shenzhen dropped compared with the same period last year, with some cities witnessing a major dip of 51.13 percent.

Statistics from the Beijing Real Estate Transaction Management Network showed that only 3,351 houses were traded successfully in May, just 30 percent of the 11,187 houses sold in May 2009.

Some 300,000 sq m of residential houses were sold in May, 70 percent less compared with that in May 2009.

The average price of newly introduced real estate projects in Beijing touched 25,680 yuan per sq m in May, 2.5 percent higher than in April.

Jiang Zheng, deputy manager of a real estate company in Xi'an, said that as buyers continue to increase, real estate developers will not decrease prices unless forced to.

"We have time to see who is more patient, the buyers or the developers?" Jiang said.

Yu Li, professor and economist at Xi'an Jiaotong University, said the adjustment and control policies showed the government's determination to curb rising prices.

Experts said if the business volume continues to slow in the next two or three months, housing prices can drop by 10 percent.

"I think the price of real estate will be stable in June, and drop in July and August," Yang said.