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Home price increases slowing (2)

(China Daily)

09:37, October 19, 2011

"The rapid growth in property prices has been markedly contained, but we'll still need to consolidate the result and closely monitor the market," NBS spokesman Sheng Laiyun said in a news conference in Beijing.

"Residential prices will see a bigger drop in the fourth quarter of this year as the government's tightening credit policy toward property developers and individual buyers continues and even strengthens," said Joan Wang, head of research at Savills (Beijing).

On Oct 13, the Beijing branch of China Construction BankCorp raised the mortgage rate for first-home buyers to be 1.05 times the benchmark interest rate. It used to offer first-home buyers 30 percent off the benchmark rate.

So far, some banks in 14 cities, including Guangzhou, Shenzhen and Shanghai, have raised the mortgage rate by 5 percent to 30 percent, a move experts said will slam owner-occupiers and thus hurt the property market.

Li Min, a 28-year-old company executive, intended to buy an apartment around the end of the year but is now postponing his plan.

"The price drop has almost been offset by the growing mortgage cost," Li sighed.

According to Wang, the property price in Beijing fell about 3 percent in the third quarter.

"Given the government's rigorous measures to curb speculative home purchases, first-home buyers or owner-occupiers have been the major customer group in the market," said Wang. "Such a measure will definitely hurt demand and thus help to further lower property prices."

China's property sales rose 23 percent to 3.9 trillion yuan ($611 billion) in the first nine months, while development investments gained 32 percent to 4.4 trillion yuan, according to the NBS.

"The increase in China's property investment is largely due to social housing," said Wang.

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