China continues to adopt dampening measures on real estate in Haikou

 

Several cities throughout China will continue to implement restrictions on purchases of real estate in 2011, the Shanghai Business Daily reported Wednesday.

 

Fuzhou and Xiamen in Fujian Province, Haikou in Hainan Province, and Wenzhou in Zhejiang Province extended the implementation of measures put in place last year that restrict property purchases.

 

In a bid to stabilize real estate prices, the State Council issued a circular on April 17 last year containing measures such as forbidding commercial banks from giving loans for the purchase of a third home and raising the minimum down payment and loan rates for families who wanted to buy a second home.

 

The Beijing government issued a document giving specific details on the implementa-tion of the circular 13 days later. The municipal government also ruled that one family could buy only one new home in the city.

 

Some 15 other cities, including Shanghai and Guangzhou, have followed Beijing's lead, the Shanghai-based First Financial Daily reported Tuesday.

 

The restrictions are seen as the harshest measures the government has taken to control real estate prices. However, Wang Haibin, the chief analyst of Shenzhen-based World Union Properties, was quoted by the paper as saying that the measures had not achieved their intended effect.

 

"It has had a substantial influence on the trading volume, but not on prices," Wang said.

 

Data provided by Centaline Property Research Center showed that last October, the trading volume of houses in Shanghai and Shenzhen dropped 50 percent and went down 30 percent in Beijing compared with the same month in 2009.

 

However, the real estate price index released last November by the National Bureau of Statistics showed that of the 15 cities that adopted the policy in September, it had its intended effect only in Guangzhou, where the price of new houses dropped by 0.1 percent, while prices in five other cities remained the same as in 2009.

Prices went up in 10 other cities, with those in Haikou and Sanya rising most drastically, by 49 and 55.1 percent respectively, the index showed.

 

Wang said the trading volume in these cities, after falling temporarily, rose again in November, causing anxiety over a possible rise in prices.

 

Yang Hongxu, the head of the research department at the Shanghai-based Research and Development Institute of E-house China, said it was a matter of time before house prices were affected.

 

"If we can stick to the policy for one year and even longer, it will lower prices. The lasting fall in trading volume must bring a drop in prices," Yang told the Global Times.

 

SOURCE: Global Times