Curbs power high-end real estate
Updated: 2010-11-23 10:58
By Wang Ying and Hu Yuanyuan (China Daily)
People stand on the balcony of the penthouse apartment on the 42nd floor of the Tomson Riviera in Shanghai. Prices of luxury homes in city, which account for 10 percent of the market, will continue to climb as values of mid- and low-end real estate are also rising, according to UBS. [Photo / Bloomberg]
In Shanghai, nearly 80 percent of the new properties that carried a price tag of more than 50,000 yuan ($7,531) a square meter raised their price.
This happened just one month after the Shanghai municipal government announced new regulations to cool down the city's overheated housing market.
According to property agent Century 21, among the 19 new residential projects priced above 50,000 yuan a sq m, more than 80 percent of them had a price hike between 7 and 12 percent from Nov 1 to Nov 17. But the sales volume of these monitored properties dropped more than 20 percent during the same period.
The situation in Beijing is similar. Industry statistics show that the average price of the top 30 luxury apartments in Beijing reached 57,561 yuan a sq m in the third quarter, an increase of 7.1 percent over the previous quarter. The year-on-year growth hit 57.8 percent.
Kylin Mansion, for instance, a project located along Beijing's East Second Ring Road, increased its sales price by 4 percent to 48,000 yuan a sq m over the weekend.
"A jump in transaction volumes in November is contributed to the price hike," said a sales manager of the project.
For Grant Ji, director of the investment department of real estate service provider Savills (Beijing), soaring inflation pressure is a major reason for surging property prices in the high-end residential sector, which is usually regarded as a good choice to hedge inflation risks.
China's consumer price index (CPI), a key gauge of inflation, surged 4.4 percent year-on-year in October to a 25-month high, stoking inflation fears, the National Bureau of Statistics said on Nov 11.
According to Chen, the new housing regulation that allows each household in Beijing and Shanghai to purchase only one more apartment might be the reason behind the soaring price of luxury properties.
The amount of buyers' disposable funds doesn't change, so investors would rather buy more expensive apartments to scoop the biggest profit under the current policy, added Chen.
Lu Qilin, director of Uwin Real Estate Research Center, added that because rich homebuyers find it hard to apply for a mortgage, they chose to make one-off payments.
Property prices in China's major 70 medium- and large-sized cities increased 8.6 percent in October, up 0.2 percent compared with September, said the bureau.
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