China market heating up again despite cooling measures
September 14, 2010 - China
China's recently implemented property market cooling measures did not have much effect in the month of August - the country's biggest developer China Vanke earned a record 11.9 billion yuan (US$ 1.76 billion) in sales during the month while prices increased 84 per cent in Shenzen, 56 per cent in Guangzhou, 31 per cent in Shanghai, and 23 per cent in Beijing, according to the South China Morning Post.
The lack of cooling of the market may prompt new austerity measures from the central government, the Morning Post said. Previously implemented measures may have ironically had the effect of spurring sales by making homes cheaper.
"This may trigger the introduction of stricter enforcement of existing measures," said Lee Wee-liat, regional property research head at Samsung Securities.
"If prices continue to grow, the government may introduce a property tax in one or two cities or even tighten credit conditions for developers as a way to reduce the asset bubble."
China's central government implemented cooling measures - including increasing the minimum down payment required on investment homes, raising lending rates loans, and banning mortgages on purchases of a third property - in April as a response to soaring home prices that were putting ownership out of reach for the middle class.
Home values in China's biggest cities skyrocketed in 2009 - Shenzhen rose 95 per cent, Beijing rose 88 per cent, Shanghai 43 per cent, and Guangzhou 41 per cent.
The April measures made an impact at first, with property sales falling as much as 60 per cent in major cities, but sales picked up again in July and took off in August.
Source: Property Report
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