Will purchasing limits cool China's housing markets as expected? Property developers remain calm (2)

16:54, March 02, 2011      

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REAL ESTATE DEVELOPERS EASY ON PURCHASE RESTRICTIONS

Real estate developers have remained calm while they wait to see further results.

Prices of more than 90 percent of housing projects remained stable last month, said Zhang Dawei, an analyst with the Centaline Property in Beijing. Centaline Property projects no large correction in housing prices in the city as supply remains at low levels in the first half of 2011, he said.

"I believe new policies will come out within one or two years to substitute the restrictions, so many real estate developers have adopted a wait-and-see attitude, especially those who have strength," said Zhao Ertian, a real estate agent for Hebei Guoda Real Estate Agency.

Housing prices may soar when the new policy comes out, said Zhao, "because now, people who have the demand will wait to see whether the property price will fall or not. Once the policy changes, people who have waited will fear that the price will go up and they'll start to buy. The purchasing limits will not curb the real demand. So by then, when the real estate developers are eager to sell and make a profit after the off season, the housing price will soar."

"Besides waiting now, we have other methods to pass this slack season," said Wang Shiqing, the sales director of Hebei Yixing Real Estate Company. "For example. we change some of our home projects to office buildings."

"It is very flexible as far as real estate sector is concerned, some business people may change industries when they think the policies are not favorable at present, but they may come back when the policy changes," Wang added.

PROPERTY TAXES--AS A WAY OUT

Chinese Premier Wen Jiabao on Sunday reiterated his determination to rein in the country's soaring housing prices during an on-line chat with the public.

Many experts suggest using a property tax as a way to cool the market, in the long run.

"How will the purchasing limits affect the market? We can't tell now. People all have to wait and see. But I believe a property tax together with the government subsidized housing projects would be methods to solve the problem in the long run," said Liang Yuemin, a deputy researcher for Hebei Provincial Academy of Social Sciences.

Zhu Zhongyi, the vice director of the China Real Estate Association, also said that a properly levied property tax could solve the problem in the long run, though the introduction of trial property taxes in Chongqing and Shanghai have had very limited impact.

"It can't bring big changes at present, but it does send the right signal," Zhu said.Source:Xinhua
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