Photo taken on July 6, 2011, shows citizens visiting the Summer Real Estate Fair in Shenyang, capital of northeast China’s Liaoning Province. © Xinhua

By Wang Guanqun

BEIJING, Sept. 13 — New home prices, property transaction volumes and residential land prices in major Chinese cities all fell in August, suggesting the policies aiming at cooling the housing market are taking effect.

A report published by the China Index Academy (CIA) said the prices for new homes in ten first-tier cities, including Beijing and Shanghai, dropped 0.41 percent in August from July to 15,773 yuan (2,465 U.S. dollars) per sq m, the first decline since September of last year.

On a month-on-month basis, new home prices in 44 of the 100 cities monitored by the Beijing-based institution saw declines in August, up from 33 cities in July. Seven of the ten first-tier cities saw month-on-month drops, according to the CIA.

Meanwhile, the average floor price for residential land in 133 Chinese cities studied by the CIA plunged 9 percent to 1,619 yuan (253 U.S. dollars) per sq m in August, said the institution.

The transaction volumes for residential land in the cities continued to drop to 20.18 million sq m last month, down 17 percent from the same month last year and down 14 percent from a year earlier, according to the CIA.

Analysts attributed the property transaction declines in the major cities to the Chinese government’s adoption of a serious of measures earlier this year to curb soaring real estate prices. These measures included purchase restrictions, higher minimum down payment requirements, property taxes in the municipalities of Chongqing and Shanghai, and constructions of more government-subsidized apartments.

“The growing trend of the property prices in the past one year came to a halt in August, indicating that the property-cooling measures are bearing fruit now,” Liu Haibo, southern region general manager of the CIA, was quoted as saying by China News Service.

SLUGGISH MARKET

The capital’s new home sales dropped to 5,506 units in August, with daily sales of less than 200 units, according to the statistics posted on Beijing’s real estate transaction management website. Beijing’s new home transaction volume last month slumped 36.7 percent from July, or 16.4 percent from a year earlier, an all-time low in nearly three years, according to the website.

The housing prices in Beijing also saw a declining trend starting from May. According to the website, in the first five months of this year, the average new home price was 14,127 yuan per sq m.

In the first six months, the figure dropped to 13,623 yuan. The average price declined further to 13,623 yuan per sq m in the first seven months.

Xinhua reported the east Beijing’s Tongzhou District has witnessed a roller-coaster surging and plummeting of new home prices since last year.

A real estate in the district, Runfeng Lingshang, had been expected to be priced at 25,000 yuan (3,906 U.S. dollars) per sq m in 2009. But when contacted by Xinhua on Sept. 7, a saleswoman of the project said its homes will be sold at 13,000 yuan (2,031 U.S. dollars) per sq m.

“The property prices in Tongzhou District have fallen back to the level of 2009,” a manager of Yahao Real Estate Selling and Consulting Agency told Beijing Business Today.

Apart from Tongzhou District, many real estates in Beijing’s Fangshan and Daxing District also offered large discounts amid sales stagnation recently, according to Xinhua.

In Shanghai, the average home price was 22,026 yuan per sq m in August, almost the same as in July, according to China Real Estate Information Corporation. But the new home sales plummeted 25 percent from July, or 18 percent from a year earlier, hitting a new low since August 2005.

Another Xinhua report published on Sept. 9 said the 106 listed property companies’ overall asset-liability ratio increased 3.58 percent in the first half of this year to 72.25 percent. The total inventory of the 106 firms topped 964.011 billion yuan (151 billion U.S. dollars), up 38.39 percent.

On Sept. 5, China Vanke Co., the country’s largest property developer by market value, announced in a statement that its sales for August fell 12.6 percent from a year earlier.

In order to ward off risks, China Merchants Property Development Co., another giant property developer, vowed it will “actively participate in the constructions of affordable housing projects in major cities.”

MORE SUBSIDIZED HOUSES

In response to public complaints about soaring property prices, the State Council, or China’s Cabinet, has drawn up a plan to build 10 million subsidized housing units this year and 36 million more over the next five years.

These units include affordable homes, low rent homes, price-capped homes and public rental homes.

The government has allocated a total of 170.5 billion yuan (26.6 billion U.S. dollars) to build affordable homes for low-income people this year.

Up to the end of August, local authorities across China had started building or renovating 8.68 million government-subsidized housing units this year, completing 86.percent of the annual target, according to a statement issued by the Ministry of Housing and Urban-Rural Development (MOHURD) on Sept. 9.

MOHURD Minister Jiang Weixin said last month that construction of all subsidized housing units should be started before the end of October, and the main framework of at least one third of the housing projects should be finished at the same time.

Hebei, Liaoning, Fujian, Shandong and Shaanxi provinces have started building more subsidized housing units than the number as ordered by the State Council for the year.

Meanwhile, the Central Commission for Discipline Inspection (CCDI) of the Communist Party of China (CPC) tightened the supervision on the construction of affordable housing projects nationwide.

The discipline watchdog was sending 10 inspection teams to 20 provinces, autonomous regions and municipalities in the following two weeks starting from Sept. 6 to assess the implementation of the central government’s policy, check the quality of the housing, and verify the proper use of public money.

MIXED EXPECTATIONS

September and October are considered as the prime season for property sales, but the sluggish transactions across the country in August cast shadows on this year’s sale prospect.

The policies of purchase restrictions and affordable housing construction adopted by central and local governments have had a profound impact on the property market.

“The purchase restrictions can effectively curtail the speculative investment, and the affordable housing projects will ease the contradiction between supply and demand,” Chen Zhi, deputy secretary-general of Beijing Real Estate Association, was quoted as saying by Beijing Daily.

In accordance with this policy, more and more potential home buyers choose to wait and see. Now 58.82 percent of respondents are hesitant to buy a home as they are still weighing the prices and discounts, according to an online survey conducted by China’s leading property information website soufun.com.

“The policies showcase the central government’s determination on curbing housing prices,” Zhang Dawei, market research director of Beijing Centaline Property Consultants Co., told Xinhua, “This has directly influenced the consumers’ psychology, and will thus cause the sales to fall in September and October.”

Besides, China’s prudent monetary policy starting from the beginning of this year increases the housing developers’ financing costs and asset-liability ratio. The funding pressure will further increase, prompting some developers to undersell their homes for quick cash withdrawal.

“This (the prudent monetary policy) has significantly reduced developers’ bargaining chips,” an editorial on China Securities Journal commented on Sept. 9.

But Wang Xiaoqin, professor of economics with Huazhong University of Science and Technology, believed the developers will offer more discounts in the sales of coming months to push up the transaction volumes. He told Xinhua the sales may go up in September and October, though the prices will drop.

“We should still be cautious as the foundation is not solid for healthy and stable development of the property market, and the inflation is expected to remain high, so the home prices will maintain steady and relatively high,” Chen Zhi told Beijing Daily.

“Besides, the formulation of long-term policies on the supervision over the property market, such as the land law, real estate law and the property taxes, are still in progress or under study. The fundamental mechanism that can directly impact on the development mode of the real estate market is yet to come,” Chen added.

“So once the current policies are relaxed, the market would see a retaliatory rebound,” he warned. 

On Xinhua Web site: http://news.xinhuanet.com/english2010/indepth/2011-09/13/c_131135440.htm