Property curbs power China’s luxury market
November 26, 2010 - China
The price of luxury homes in China's key cities has been increased after the government has launched new policy to restrict the amount of properties a family could buy, and investors eager to keep the growing inflation risks under control .
After the Shanghai municipal government announced the cool down measures, almost 80 per cent of the new properties, priced above 50,000 yuan (US$7,531) per sqm, raised their price.
According to property agent Century 21, among the 19 new residential projects priced above 50,000 yuan per sqm, over 80 per cent of them had a price hike from 7-12 per cent between November 1 and 17.
But the sales volume of these properties dropped more than 20 per cent during the same time.
Meanwhile in Beijing, industry statistics show that the average price of the top 30 high-end city apartments reached 57,561 yuan per sqm in Q3, an increase of 7.1 per cent over the previous quarter. The year-on-year growth hit 57.8 per cent.
Grant Ji, director of the investment department at Savills (Beijing) said that soaring inflation pressure was a major reason for increasing property prices in the luxury residential sector.
Chen Jie, a Fudan University professor specialising in the property market, believed that the new housing regulation that allows each household in Beijing and Shanghai to purchase only one more apartment might be the reason behind the soaring price of luxury properties.
According to Chen, the amount of buyers' disposable funds doesn't change, so investors would rather buy more expensive apartments to scoop the biggest profit under the current policy.
Source: Property Report
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