Property

Sky-high Property Prices in China

Sky-high Property Prices in ChinaHome prices are unacceptably high for many Chinese, according to a recent survey compiled by the central bank, People’s Bank of China. The result shows that more than two-thirds of the 20,000 people surveyed, or 68 percent of them said current home prices are “too high and hard to accept”. It is the highest percentage recorded since the fourth quarter of 2011. While home price is already in its historical high, 34 percent of those surveyed expected home price will continue to rise in the coming three months, up 5.4 percentage point from last quarter.

It came after the China’s State Council announced in last month that local governments would have to enforce a 20% capital gains tax on property resales, along with other cooling measures such as increased downpayment requirements and higher mortgage rates.

Some industry experts echo the findings. Lu Ting, an economist of Bank of America Corporation based in Hong Kong said that the inflation has driven up prices of almost everything and it is nearly impossible for home price to fall alone.

The latest data from the National Bureau of Statistics shows more evidences of the price uptrend. Prices of new homes rose in 66 of 70 major cities in February, compared with only 53 last month. Meanwhile, national home prices in the first two months of 2013 rose to RMB 6,636 psf. In term of floor spaces, housing sales was up by 55 percent in the January-February period compared with that a year ago, totaling 189 million sq meters.

Total home sales in first-tier cities dropped sharply in February due to the Lunar New Year holidays. In Beijing, housing sales fell by over 50 percent month-on-month in terms of both floor spaces and units. However, if compared with that a year ago, it was up by 21 percent year-on-year. The same goes for Guangzhou, where its home sales in February were up by 38 percent in term of units and 48 percent in term of floor spaces, respectively.