Chinese Property Prices Slowing: Report

SINO DAILY

Shanghai (AFP) Jul 12, 2005
China's overheated property market is showing sings of cooling in 35 cities as government curbs on the sector bite, state press reported Tuesday.

Urban housing prices rose eight percent year-on-year in the second quarter, 1.8 percentage points less than in the January to March period, the Shanghai Morning Post cited the National Development and Reform Commission as saying.

Government measures announced in April aimed at cooling unrestrained growth in the sector were proving effective in deflating what is widely believed to be a major bubble, the commission said.

Measures vary from city to city and include a capital gains tax depending on the length of a buyer's holding period, the banning of pre-completion sales and a tightening of land-use rights.

In Shanghai, one of the worst cases, real estate prices have continued to rise sharply, increasing 11.6 percent in the second quarter although this was 7.4 percentage points less than in the first quarter.

Shanghai earlier this year enacted new rules requiring home owners to pay off their mortgage before selling a property, while in March the floor lending rate for housing loans of five years or more was raised 20 basis points to 5.51 percent.

Loans now also require a downpayment of 30 percent of the price, up from 20 percent.

Neighbouring Hangzhou in Zhejiang province saw the steepest quarterly rise, with prices jumping 12.5 percent. Qingdao city in Shandong province, also in the east, was up 12.4 percent.

China's secondary housing market saw price growth trimmmed 1.9 percent compared with the first quarter of the year as average prices rose 9.5 percent.

Residential rents failed to keep pace with price growth, up only 1.9 percent, usually a strong sign that the market remains sharply unbalanced.

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