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New Home Purchase Restrictions Effective during Short Term

source:Global Times release date:2016/10/24 hits:254

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Market will stabilize in near future, analysts say

Real estate markets in some first- and second-tier cities in China are showing signs of cooling following the implementation of new purchase restrictions by local governments, experts told the Global Times on Sunday.

As of October 16, 130,944 new home trading contracts were signed in 54 major cities around the country, down from 137,483 in the first 16 days of September, according to a report from cnr.cn on Thursday, citing data from Centaline Property.

During the short term, some cities have seen transactions for new homes declining. For instance, the figure in Suzhou, East China's Jiangsu Province, was 416 from October 10 to 16, down from 667 in the October 3 to 9 period and 3,074 in from September 26 to October 2, according to data from housing information provider fang.com.

Nanjing, capital of Jiangsu Province, recorded 1,304 transactions from October 10 to 16, compared with 1,635 in the previous week, the data from fang.com showed.

"New local government restrictions have been effective in some cities during the short term," Hui Jianqiang, research director with real estate information provider Beijing Zhongfangyanxie Technology Service, told the Global Times on Sunday.

In the first half of October, gains in new home prices in 15 major cities, including Beijing, Shanghai and Shenzhen, South China's Guangdong Province, slowed notably, and prices even fell in some cases in the first half of October, compared with September, the National Bureau of Statistics (NBS) said on Friday. The NBS tracks housing prices in 70 major cities.

"The data show the rapid price gains in 15 first- and second-tier cities surveyed by the NBS have been curbed effectively. Prices are stabilizing," Liu Jianwei, the senior NBS statistician, said in a statement released by the bureau on Friday.

Of the 15 cities, new home prices in Shenzhen and Chengdu, capital of Southwest China's Sichuan Province, fell 0.3 percent and 0.1 percent respectively in the first half of October from the second half of September, said Liu. Other cities all found that gains in new home prices slowed notably in the first half of this month, according to Liu.

"The curbs have taken effect in a short time, but they will not decide the situation in the housing market for the long term," Hui noted. "With the effects being limited, housing demand will still keep growing, and home prices will become stable."

Meanwhile, some cities have seen housing investment declining. For instance, in the first three quarters, the total real estate investment was 171.06 billion yuan ($25.28 billion) in Hangzhou, capital of East China's Zhejiang Province. That city recorded a decline of 7.7 percent, compared with 15.5 percent in the first three quarters in 2015, according to a statement released by the local government's official website Hangzhou Statistical Information Net on Friday.

In the first nine months, developers' land purchases in the country reached 149.17 million square meters, down 6.1 percent year-on-year, according to the data released by the NBS on Thursday.

"Land supply is limited in the first-tier cities, but real estate developers are reluctant to purchase more land in third- or fourth-tier cities due to the sluggish market," Jiang Yining, a real estate analyst with Capital Securities, told the Global Times on Sunday.

"Curbs on home purchases might lead some fund flows into the smaller cities to boost local property markets. As a result, real estate developers are likely to increase investment," noted Jiang.

"For the long term, real estate investment in the country will maintain stable growth," Hui said.

Since September 30, more than 20 cities, including first-tier cities like Beijing, Shanghai and Shenzhen and smaller cities such as Suzhou have announced new restrictions on property purchases.