Housing prices grow at slower pace
(Shanghai Daily)
Updated: 2005-11-10 11:21

China's housing price growth continued to slow in October, traditionally one of the hottest sales months of the year, as a result of the government's regulatory measures.

New residential buildings are erected along Maoming Road in Shanghai, which is on the list of five cities that recorded the biggest drop in housing prices last month. [Shanghai Daily]

Nationwide, residential property prices rose 0.5 percent last month, compared with a 0.6 percent gain in September and a 0.7 percent increase in August, according to a survey by the national development and reform commission and national bureau of statistics.

Shanghai, which led the price drop in September, remained on the list of the five cities that recorded the biggest drop last month.

Prices of newly launched projects and secondhand houses in Shanghai both dropped 1.2 percent in October compared to the previous month, according to the survey. The decline rate was the same as in September.

The transaction volume in the city remained low at about 400 units per day last month, compared to the peak of 700 units a day last year.

Analyst said numbers will intensify the stalemate between buyers and sellers.

"Buyers now don't want to buy at current prices in anticipation of further declines, but sellers don't want to drop their prices as they are betting there is rigid demand in the market." said Lin Kai, an analyst with Soufun.com, one of the major online real estate services companies.

"Although the price has dropped a little bit, it still is beyond my affordability," said Sun Kai, a 26-year-old Shanghai office worker who plans to purchase an apartment before getting married next year.

Rocketing prices in Shanghai in the past two years has made it increasingly difficult for university graduates and first-time home buyers to afford a house.

The central government increased mortgage rates, especially for luxury homes, and raised lending rates to property developers in March to rein in speculation.

Shanghai started levying a tax in June on homes sold in less than a year after purchase to drive speculative capital out of the market.

These measures have had an impact — even putting some real estate companies into a dilemma when launching new projects.

Hong Kong-listed Shanghai Forte Land Co, one of the city's biggest developers, plans to launch a villa project in Beiqiao Town at the end of this month. But it remains tight-lipped on prices.