Chinese property developers are cutting prices for newly launched flats in leading cities following government intervention to eliminate speculation in the market. More than 20 Chinese cities have rolled out a raft of tightening measures in a bid to curb the overheated housing market since the fourth quarter.
Shenzhen, which ranks as the country’s hottest housing market after new home prices surged 50 per cent in 2016, is facing tight scrutiny on real estate prices. In January, the Urban Planning, Land and Resources Commission of Shenzhen Municipality unveiled government guidance on home prices stipulating that builders would not be granted presale permits if they set prices higher than the regional average.
Image: South China Morning Post
As part of the new measures, developers are to be notified of specific price limits when they submit applications.
China’s property sales have fallen since the policy tightening. Of the 70 Chinese cities tracked by the statistics bureau, 46 reported price increases in December, compared with 55 in November. Average new home prices in China’s four biggest cities were unchanged in December on month, slowing from a 0.1 per cent increase a month earlier.
And more measures are coming to prick a potential bubble. State-owned China National Radio reported Monday that 20 cities including Shenzhen, Nanjing and Suzhou will tighten mortgage requirements, following similar moves in Beijing and Guangzhou.
Beijing’s municipal government last week shortened the mortgage duration for second-home borrowers domiciled in the city to no more than 25 years, cutting back the loan period from the previous 30 years. Industry analysts forecast a dimmer outlook for the sector this year amid policy risks. Morgan Stanley expects new home sales by volume in 2017 to decline 5 per cent, and average selling prices to increase 3 per cent. They forecast new home sales in first and second tier cities will decline by 15 per cent, while prices will likely remain flat.