The Chinese government has been engaged in an aggressive campaign to slow skyrocketing real estate prices in the country since the year began, and now it appears the measures are making an impact. Prices in August only saw a 0.07% increase compared to 0.21% in July and a 6.9% increase in August 2010. The Chinese housing ministry is extending housing purchase restrictions in 40 main cities in an attempt to secure the slowing momentum, and higher interest rates will also likely continue. Market observers note that prices will not drop unless demand also drops, and that does not look likely in the foreseeable future. For more on this continue reading the following article from Property Wire.
Residential property prices in China are still rising but at their slowest rate this year in a sign that government measures to cool the nation’s booming real estate market are beginning to take effect.
Prices edged up slightly by 0.07% in August compared with July’s 0.21% monthly increase, according to the latest China Real Estate Index System.However, from a year earlier, the average price for new properties was up 6.9% in August, compared with July’s 6.8%.
A survey of property developers and real estate agencies cited by Dow Jones showed that the average home price in August was 8,880 yuan (S$1,675) per square meter, slightly up from 8,874 yuan in July, but some locations are seeing prices falling. The Index shows that property prices in 56 cities increased in August compared with July, while 44 cities reported a decline.
The Chinese government has implemented several measures to control speculation in its property market, including home purchase limits, higher interest rates.
It is also reported that China’s housing ministry intends to extend a home purchase limit programme currently aimed at 40 main cities to its lower tier regions.
The National Bureau of Statistics is scheduled to issue its August data for residential property prices in 70 major cities later this month.
Chinese Premier Wen Jiabao has repeated that the country needs to focus on its efforts to rein in housing price gains in second and third tier cities. ‘We must unswervingly curb irrational housing demand, continue to strictly implement differential housing loans, tax policies and restrictions on purchases,’ Wen wrote in Qiushi magazine, an official publication.
‘At the same time, we need to focus on suppressing overly rapid price gains in second and third tier cities to promote a return to reasonable home prices,’ Wen said in the article.
According to WorldUnion Property Consultancy more property developers will cut prices in the second half of this year due to the government’s efforts to curb price growth. ‘Probably transactions will rebound in the rest of the year as prices fall. We believe that in most cases a 10% price drop could greatly stimulate sales,’ said Wang Haibin, chief analyst at World Union.
Qin Xiaomei, chief researcher at the international real estate service provider Jones Lang LaSalle said that a big price decline is not likely because demand remains strong. He also pointed out that price changes will be different according to location and property type. ‘Quality, high end homes with a prime location will remain stable,’ Qin said.
This article was republished with permission from Property Wire.