'No presale' shocks Nanning's realty market

11:01, January 26, 2010      

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Guangxi Zhuang Autonomous Region's housing and urban-rural development department announced on Jan 23 that in order to regulate the real estate market, Guangxi will choose its capital city Nanning as a pilot city to ban the sale of uncompleted residential houses.

On January 24, the day after the announcement, only 38 apartments were sold, 80 percent lower compared with the average daily sales of over 200.

Song Jidong, the Party secretary of the regional housing and urban-rural development department, said the ban on the presale of commercial residential houses can be seen as an orientation. Specific policies and measures are still being formulated.

However, real estate developers were astonished. The ban will increase the developers' financing costs and risks, said a high executive from a local developer. "Its power is ten folds as much as property tax."

In 2009, consumers' advanced payments accounted for around 25 percent of the total 5.71 trillion yuan of real estate developing funds, according to the data from the National Bureau of Statistics (NBS).

In the long run, the ban on the presale system will affect developers' financing and lead to insufficient supply and rising housing prices, said Ji Feng, an analyst with Centaline Property Agency Limited.

However, Lu Qiling, deputy director of the research center under Youwin Property pointed out that the ban will help to solve some problems such as house quality. "It will bring more benefit than harm."

By People's Daily Online
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