chinese government credit curbs weaken housing sales
News Posted On: 20 October 2011
There is little doubt as to whether the Chinese government's curbs are now working, as there were property price gains in less than half of the 70 cities monitored by the government in September.
Prices of new homes in China's largest cities of Shanghai, Beijing, Shenzhen and Guangzhou were unchanged from August, as were prices in another 26 cities. Just 24 cities recorded price gains while another 16 posted month on month declines.
Economists think the correction in China's housing market has begun, but the measures implemented by the government are unlikely to be eased until property prices fall further. Most analysts think prices will need to fall between 5% and 10% before the government eases home purchase restrictions.
Earlier in the year the government imposed property taxes on two cities, one of which was Chongqing where prices showed the steepest decline, dropping 0.4% from August.
These measures are affecting China's property developers who reported mixed sales data last month. The largest developer, China Vanke Co., said sales fell by 12% compared to a year earlier, while another developer, China Overseas Land & Investment Ltd found sales had declined by 18%. However Evergrande Real Estate Group Ltd said sales in September had increased by an incredible 79%.
Property sales in China increased by 23% to $611 billion during the first nine months of this year, and new property construction increased by 24% to 16 billion square feet in the same period. However some luxury developers are expected to find times a little harder, as banks in 14 cities are due to raise mortgage rates for first homes by up to 50%.
View property for sale in China
Written by Les Calvert
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