Property prices rise 10.7% y/y in February
Property prices in China rose 10.7% year-on-year in February, according to new figures released by the National Bureau of Statistics. While prices continued to rise, overall sales growth of residential properties appears to be slowing: Sales volumes grew 37% in the first two months of the year, from growth rates of more than 50% at the end of 2009. Data from property consultancy Soufun showed residential sales volumes fell 49% in February from the month before.
50% down payment now required for land
A down payment of 50% is now required for all land purchases in China. The down payment must be paid within a month of signing the purchase contract. Bidders must also pay a 20% deposit on the minimum price of the land involved in land auctions. Any delay in housing projects must also be explained in writing to the ministry.
China is now world’s largest property market
China overtook the US to become the world’s biggest real estate investment market in 2009 and is likely to remain in top position this year due to the overall strength of the economy, according to a report by Chushman & Wakefield. Property investment more than doubled last year to US$156.2 billion against a 64% fall in the US to US$38.3 billion. The report argues that volatility in China’s real estate industry is insufficient to drive back the vast wave of investment targeting the sector.
S&P: Mid-2010 could be ‘turning point’
Property developers will not find this year as severe as the slowdown in 2008 or as volatile as 2009, but mid-2010 could be decisive for many firms as more supply comes online while government policy softens demand, ratings firm Standard & Poor’s (S&P) said. The central government has already taken action to cool prices that rose 9.5% year-on-year in January and 10.7% in February.
State firms told to exit real estate
China’s State-owned Asset Supervision and Administration Commission (SASAC) told state-owned enterprises (SOEs) dabbling in real estate to prepare to exit the market, state media reported. With the exception of 16 SOEs which are pure real estate developers, 78 other enterprises under SASAC supervision are to speed up restructuring and withdraw from the property sector.
ON THE RECORD:
Andy Xie, an independent economist, on the relationship between China’s government and its real estate developers: "Inflation will finally end China’s property bubble, most of the profits will fall into the government’s purse and the developers will be able to gain 25% of the gross profit."