Money

Home sales drop as tough mortgage rules bite buyers

By Liu Lu (China Daily)
Updated: 2010-06-10 11:40

Beijing's housing market has fallen sharply, hitting a record low last week, with industry experts warning that sales of homes are expected to go down even further.

Only 61 flats were sold each day in the first week of this month, compared with 497 over the same period last year.

Zhao Yang, a researcher at the Property Study Center of Peking University, predicts the volume will drop even further.

He said he believed the volume will keep falling until next month, when more projects in Chaoyang district are expected to enter the market.

Official statistics show that only 428 sales contracts for apartments were signed last week, a 30 percent drop from the previous week, and the fourth continuous week the city's average daily sales volume of homes was under 100.

The research center of soufun.com, China's largest real estate website, predicts the number of homes sold may drop below 4,000 this month, which would set the lowest monthly sales tally since last year.

Analysts blame the stringent second-home mortgage policy - which came in on April 15 - for the drop, saying most home buyers are adopting a wait-and-see attitude.

Meng Qi, market research director of Beijing Yuan Jia Real Estate Brokerage Firm, said the trading volume of apartments might continue to remain low, making it very difficult for developers to price and promote new projects.

In addition, due to the difficulty in obtaining sales licenses, some developers are postponing or even giving up entering the market.

"The inability to get sales licenses is the main reason for a delay for several housing projects scheduled to open for sale last week," said Meng.

Official figures show, except for only one villa project, no residential project obtained sales licenses in Beijing last week and no new residential buildings were put on the market over the weekend. By comparison, six sale licenses were obtained last week, and 2,765 were obtained the previous week.

A salesman for a housing project in Huilongguan told Beijing News that in January, all the flats of its first phase were sold out within two days of the launch.

But the project's second phase, launched early last month, attracted very few buyers and only about 100 flats out of the total of 400 have been sold.

Soufun.com said the second-home mortgage policy is accelerating the price drop and some regions such as Tongzhou district will see more severe price falls this month as buyers become more cautious about property investment.

However, the policy has increased sales of apartments aimed at low-income workers. Government statistics show that 149 such flats were sold last week, 65.6 percent up over a week before.

The strict second-home mortgage loans policy was introduced in a bid to curb real estate speculation and the rapidly increasing home prices.

Under the policy, a person wanting to buy a second home needs a down payment of at least 50 percent before being eligible for a bank loan.