Home market is back on terra firma
ANN@The China Post Tuesday, March 21, 2017, 12:00 am TWN
Fresh curbs in four cities settle fears of runaway prices and property bubble
Friday's housing curbs by Beijing and three major cities are part of the larger effort to rein in China's real estate industry where home prices tended to skyrocket of late, threatening to create a property bubble, experts said.
On Friday, Beijing raised the down payment requirements for buyers of a second home from 50 percent to 60 percent of the full price.
Now, buyers of a second home are defined as those who have a record of either a residential property ownership or a mortgage. In the past, if buyers whose mortgage had been paid off had applied for a new mortgage for a second home, they were regarded as first home buyers.
Like the Beijing municipality, Guangzhou in South China's Guangdong province, Shijiagzhuang, capital of Hebei province, and Zhengzhou, capital of Central China's Henan province, announced similar measures to contain speculative buying in the residential segment of the property industry, and thereby ensure housing remains a necessity for own use, not an investment avenue.
Zhang Dawei, chief analyst with Centaline Property, said Friday's measures would have a significant impact on Beijing's housing market, particularly preowned homes and luxury properties.
"People who sell one apartment to buy another one will be defined as buyers of a second home and have to pay higher down payment. This would hurt sales of preowned homes as well as their price growth. If the new measures continue for a year, I'd expect the capital's average price of preowned homes to drop around 15 percent," said Zhang.
Agreed Guo Yi, marketing director of real estate consultancy Yahao. "These measures will largely reduce leverage and cool the market quickly," said Guo.
But, in the long run, home prices will likely still rise after this round of correction, she said.
Even before the four maor cities cracked the whip on Friday, there were signs that the market players may have heeded the government's discourse and begun to fall in line.
The said signs are like dots that, when connected, morph into a tell-tale figure (or story, if you will).
Dot 1: One day recently, Zhang Yuanfan, 33, a graphic designer in Shanghai, was curious why the outlet of a real estate agency chain at her residential community was redecorating the office, and had ripped off all the price tags that used to be displayed on the glass wall.
"Every day, as I passed by the glass wall, I'd glimpse the house prices, which have been rising in the past two years. Now all the numbers are gone, and I suddenly felt like I had lost contact with an old acquaintance," said Zhang.
Dot 2: Luo Dongwen, 34, a property agent, said many of his peers in the real estate market in Shanghai are doing the same－removing prices of apartments, and adding more information to guide buyers. Full disclosure is in fashion these days.
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