Housing News
- New home prices slip as sales fall
Date: 8-Nov-2007 Sources: (Shenzhen Daily)
A SLOWDOWN in Shenzhen property transactions triggered by the government's latest policy measures to slow demand in the market has forced developers to reduce asking prices for new projects.
'The asking prices of many new projects released in Shenzhen in October were 10 percent lower than developers' original target prices,'Michael Choi Ngai-min, the chairman of Land Power International, told reporters.
'Developers had been asking for prices for new releases that were 10 to 15 percent higher than the launch prices of previous projects in the same area. But now asking prices are in line with the market,'Choi said.
The impact of the policy was most marked in Shenzhen because it was the main target of the measures after prices soared by 33 percent in the first half - the highest growth rate among mainland cities, he said.
Sales of new residential homes dropped 16 percent in September month on month to 302,400 square meters - a record low for a single month of the year, according to the local housing management authority.
That is nearly 30 percent lower than the more than 430,000 square meters sold last September.
The situation was even worse in October. Daily transactions from Oct. 1 to 9 plunged almost 80 percent from September to just 2,026 square meters. Sales dropped to less than 1,000 square meters from Oct. 10 to 16, according to the housing management authority.
The People's Bank of China and the China Banking Regulatory Commission announced a new mortgage policy Sept. 27 requiring property owners buying a second home to make a 40 percent down payment, up from 30 percent, and to pay a higher interest rate than first-time buyers. Agents said buyer concerns about more measures to come dampened demand.
In Shenzhen, before the latest round of measures, it was common to find that asking prices for new projects were 50 percent higher than in the secondary market, noted Andy Lee, a general manager of Centaline (China) in Shenzhen.
However, since market sentiment turned weak last month, he said, developers had been able to sell just 20 to 30 percent of new releases within a week, whereas it was common to sell 70 or 80 percent of new units within a day or at most a week in the first half.
In the secondary market, concerns over State policies had reduced the number of transactions of high-end housing estates by 70 percent in October from September levels.
'That was because individual buyers were still not willing to cut their asking prices,'Lee said.
'Potential home buyers or investors now worry that the Central Government may continue to introduce cooling measures in the property market,'he said.
According to the local government, the average price fetched in new projects was down 10 percent to 14,900 yuan per square meter in the first half of October, compared with September.
Lee said prices in Shenzhen would drop at least 20 percent from the peak in June, but would remain higher than the average price earlier this year. The average price of new projects in June reached 15,000 yuan per square meter.
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