Expert: Pre-sale deposit rules to make effect over time

07:56, December 07, 2010      

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Investors eyeing property in Beijing had hoped the municipal government's policy on pre-sale deposits would bring respite from soaring housing prices. But the measure has had the opposite effect, with prices for many properties surging. This has caused some angst among prospective home buyers, but as CCTV reporter Qi Tianxing finds out, the policy will take time to make an impact.

The new regulations exempt property developers who gained their pre-sale permits before December 1st from having their capital supervised.

This triggered home sales to surge in November.

Mo Tianquan, President of China Index Academy said "Regulations on the pre-sale capital will not impact the development of existing projects. Developers are not suffering at all."

Pre-sale capital also includes a land-transferring fee, as well as the fund for design and planning. Only the construction fund requires supervision, meaning most of developers'floating capital is not frozen.

Ren Zhiqiang, Chairman of Hua Yuan Real Estate Group said "It is not an absolute regulation, because developers are allowed to freely use the remaining money for the construction fund."

Experts believe that the new policy will have a more evident impact over time.

Jia Wolong, Chairman of China Estate &Merchant Coop. Ass. said "There are already lots of strict measures on banking credit, down payments and loans for property developers. These policies are all holding the lifeline of housing development. If these policies could be carried out continuously, I believe housing prices will fall in the second quarter next year."

The pre-sale regulation policy has been issued in many Chinese cities in addition to Beijing, but the effect has been limited.

Analysts have urged more measures to regulate developers' activities and stabilize the property market.



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