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Property sales in Chinese cities sluggish in August (4)

(China Daily)

13:47, September 13, 2011

MIXED EXPECTATIONS

September and October are considered as the prime season for property sales, but the sluggish transactions across the country in August cast shadows on this year's sale prospect.

The policies of purchase restrictions and affordable housing construction adopted by central and local governments has had a profound impact on the property market.

"The purchase restrictions can effectively curtail the speculative investment, and the affordable housing projects will ease the contradiction between supply and demand," Chen Zhi, deputy secretary-general of Beijing Real Estate Association, was quoted as saying by Beijing Daily.

In accordance with this policy, more and more potential home buyers choose to wait and see. Now 58.82 percent of respondents are hesitant to buy a home as they are still weighing the prices and discounts. according to an online survey conducted by China's leading property information website soufun.com

"The policies showcase the central government's determination on curbing housing prices," Zhang Dawei, market research director of Beijing Centaline Property Consultants Co., told Xinhua, "This has directly influenced the consumers' psychology, and will thus cause the sales to fall in September and October."

Besides, China's prudent monetary policy starting from the beginning of this year increases the housing developers' financing costs and asset-liability ratio. The funding pressure will further increase, prompting some developers to undersell their homes for quick cash withdrawal.

"This (the prudent monetary policy) has significantly reduced developers' bargaining chips," an editorial on China Securities Journal commented on Sept. 9.

But Wang Xiaoqin, professor of economics with Huazhong University of Science and Technology, believed the developers will offer more discounts in the sales of coming months to push up the transaction volumes. He told Xinhua the sales may go up in September and October, though the prices will drop.

"We should still be cautious as the foundation is not solid for healthy and stable development of the property market, and the inflation is expected to remain high, so the home prices will maintain steady and relatively high," Chen Zhi told Beijing Daily.

"Besides, the formulation of long-term policies on the supervision over the property market, such as the land law, real estate law and the property taxes, are still in progress or under study. The fundamental mechanism that can directly impact on the development mode of the real estate market is yet to come," Chen added.

"So once the current policies are relaxed, the market would see a retaliatory rebound," he warned.

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