Ministry of Housing and Urban-Rural Development announced that controls on the property sector will continue in 2013.
In order to prevent over-investment from property buyers, China’s Ministry of Housing and Urban-Rural Development said recently that controls on the property sector will continue in 2013. This announcement was made amidst reports of the housing market’s steady recovery over the last few months.
The world’s second largest economy has put in place tightening measures since 2010 to curb its red-hot property sector and to ease increasing public discontent over its skyrocketing home prices. These measures include higher down payment and additional property taxes.
According to the latest annual Chinese wealth report from the Boston Consulting Group and China Construction Bank Corp., some 28% of Chinese investors faced huge losses in the real estate market in 2012. About 3% of these investors saw losses of more than 30%.
Ding Yi, a developer specialising in luxury mansions in Wenzhou in the eastern province of Zhejiang, said: ‘Those property investors who purchased houses after 2009 have to [incur] losses of more than 30% if they want to sell their properties now.’
However, most experienced property investors were not as severely affected as those with less experience, who certainly have ‘learned a lesson’, said Ding. He added that the market has cooled dramatically after the measures were put in place, suggesting that most investors nowadays are staying out of the property market.
But according to Dai Fang, an analyst with Zheshang Securities, China’s property market is now relatively stable, with home prices growing gradually and will continue to do so in 2013.
Figures released by China Real Estate Index System (CREIS) indicated that the average house price in the 100 Chinese cities surveyed rose by 0.33% to RMB8,717 (US$1,377) per square metre month-on-month to July 2012. However, house prices were still down by 1.77% year-on-year to July 2012.
Fuelled by low interest rates and cheap credit, prices of China’s residential properties rose rapidly from 2000 to 2008. Dubbed the ‘world’s hottest real estate market’ by CNBC, home prices in the Middle Kingdom rose 110.9% from the fourth quarter of 2006 to the same period in 2011, based on Knight Frank data.
By Rodel Ambas Jr.
27 December 2012
Sources: Asian One, Global Property Guide