Real estate not yet cool, analysts say

08:15, January 22, 2010      

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While the public and the media have focused on supposed signs that the overheated real estate market has begun to cool down, analysts said Thursday it is still too early to determine whether or not the central government's policies have already had an impact.

In recent days, advance booking of 86 residential units have been cancelled in Wenzhou, and in Hangzhou 58 deals were terminated from January 4-14, and a return of real estate purchases was also made in Lishui and Nanjing, according to a January 15 report run in the National Business Daily.

The newspaper reported Thursday that some of the returned units in Hangzhou are owned by a company affiliated with the developer, who stockpiled houses until the home prices hit record highs.

The paper quoted insiders as saying that developers did not think home prices would go on soaring as a series of suppressing policies were issued, and began to sell their stocks in order to cash out.

And the China Business Times also reported Tuesday that some home owners in Beijing began to sell their uncompleted houses with a price relatively lower than others still held by developers. The central government forbade the selling of unfinished houses in 2005.

The newspaper said investors who had already earned large amounts urgently needed to unload properties because the government's policies would keep prices from soaring.

And Qu Anxin, a research manager with Centaline China, a real estate agency, disclosed Thursday that the second hand sales volume in some major cities dropped dramatically this month.

"The residents who want to buy units are confused as to whether the government's polices will impact home prices, and they are holding their money in their hand but are hesitant to purchase," Wei Dong, research manager for north China with DTZ, a global real estate advisor, said Thursday.

Although signs showed the overheated real estate market has begun to cool down, analysts said Thursday that it will still take time to see whether China's measures to suppress the housing market will take effect.

"It is normal that some investors sold out houses judging by the macro-control policies, but no clear signs show that the market has begun to slump," Qu said, adding that the first quarter is the traditional off-peak season for real estate.

And Wei said home prices would not drop, though bubbles do exist, and "actually both the central and local governments do not want to see housing prices fall, as real estate has become an important pillar of the country's economy."

Economist Mao Yushi said at a forum in Beijing over the weekend that the government still needs to do "huge modification" in the market to resolve the present property issues, adding that the process will take at least two to three years.

Source: Global Times
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