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Chinese House Sales Up as Local Governments “Fine Tune” Policies

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China  Beijing  Shanghai  property developers  Guangzhou  Soufun Holdings Ltd  Shenzhen  China Business Herald  China Vanke Co Ltd  Hunan  Chengdu  Wuhu  Centaline Property Agency Ltd  Chinese Real Estate Policies  Xue Jianxiong  CRIC 

Chinese House Sales Up as Local Governments “Fine Tune” Policies

By - Friday 08 June 2012

According to a new report from China's largest real estate website Soufun Holdings Ltd, homes sales in the country turned positive again in May, with month on month growth recorded across the country.

According to Soufun, sales rose in 34 out of the 40 large cities it monitors across the country between April and May. Guangzhou was the best performer with sales of new build homes in the city up 52 percent on the month, but it said that most large cities had saw significant sales growth, with Beijing, Chengdu and Shenzhen all achieving growth of over 30%.

Combined sales in Beijing, Shanghai, Guangzhou and Shenzhen nearly doubled to 40,000, compared to 21,000 in April, Soufun said.

This latest data confirms that of Centaline Property Agency Ltd, China's biggest real-estate brokerage, which recorded a 28% year on year growth in residential floor space sold in May compared to April across the 30 cities it monitors.

The growth is also confirmed by data from China Vanke Co Ltd, the country's largest property developer whose sales are often deemed a barometer of the country's property market. China Vanke recorded a month on month and year on year growth in sales for May.

The company said its sales in May totalled 10.72 billion Yuan ($1.68 billion) in value, a 19 percent increase from the 9.01 billion Yuan of sales it reported in May 2011, and 44.1 percent higher than the 7.44 billion Yuan it reported in April.

Experts on the market have put the increasing sales down to a loosening of the restrictions at a local government level. In February, commercial banks in Beijing started offering mortgages to first-time buyers at or below the central bank's benchmark rate, against rates of 5-10 percent higher in the second half of last year.

According to leading business newspaper the China Business Herald more than 30 cities (including Beijing) have "fine tuned" their real estate policies in order to boost the market since the latter part of last year. These policies have included: more favourable interest rates for first-time buyers, loosening of the upper limit for house buyers who use low-interest provident fund loans and transaction-related taxes and fees reduction.

Of the above cities monitored by Soufun, policies in only five cities, including Shanghai and Wuhu of Anhui province, have been cancelled by the central government. According to reports last week, the Hunan provincial authorities had gone further still to increase sales, with measures including lowering payment requirements for first-time buyers, although the claim has since been denied by the Hunan government.

"As seen from the current situation, if the local governments say they are not fine-tuning, it is unlikely that the central government will probe further," Xue Jianxiong, research director of CRIC China, was quoted by China Business Herald as saying.

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