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Buyers rush in where angels fear to tread
By Jiang Xufeng and Zhang Chongfang |
June 22, 2009, Monday
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Print Edition
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SUN Hua, an office worker who's spent two years in Beijing, has been looking at second-hand apartments for more than two months, along with her fiance.
"Prices aren't low. But I'm afraid that if we don't decide to buy soon, prices will spike," Sun said, as she described her struggle to make ends meet in her daily life while saving for a home.
She plans to buy a one- or two-bedroom apartment on a mortgage that will run for more than 20 years. Borrowing some money from her parents, the couple will also use their hard-earned salaries to cover the minimum 20 percent down payment.
Sun is one of millions of potential home buyers who have been worrying about rising urban apartment prices since the Spring Festival in late January.
Chinese home prices began to pick up from one-year lows starting in February and home buying volume reached a record high in recent months.
Evidently, some buyers believed that prices had hit bottom at the start of the year. The situation has given Sun and other home buyers reason for concern.
Figures from the National Bureau of Statistics (NBS) showed that prices of new and existing homes in 70 large and mid-sized Chinese cities including Beijing, Shanghai and others fell 0.6 percent year-on-year in May, but prices still edged up 0.6 percent from April.
This was the third consecutive month that home prices had climbed month-on-month. Second-hand home prices showed a similar trend, analysts said.
Although no nationwide data were available, figures provided by Beijing-based 5i5j Real Estate Service Co showed that second-hand home prices rose 1.53 percent month-on-month to 12,712 yuan (US$1,859) per square meter in Beijing in May.
Chen Sheng, vice president of the China Index Academy (CIA), a private-sector research institute that specializes in real estate, told Xinhua that the signs of life in the residential property market largely reflected government stimulus policies for the sector and consumers' inflation expectations following a loan spike early this year.
Housing loans
China's new yuan-denominated loans reached 664.5 billion yuan in May, bringing new loans in the first five months to 5.84 trillion yuan, exceeding the full-year target of 5 trillion yuan. Loans to consumers topped 187.6 billion yuan last month, the People's Bank of China (PBOC), the central bank, said last Friday.
Of the total 187.6 billion yuan of consumer bank credit in May, 100.8 billion yuan was aimed at long-term housing loans, accounting for 53.73 percent of the total. The ratio was more than 10 percentage points lower than in April, showing more people were cautious about buying homes on installment, analysts said.
China announced at the end of May that, for the first time in 13 years, the minimum capital requirements for developers to start a new commercial property or an affordable housing project had been lowered from 35 percent of the total project cost to 20 percent, a move to reduce developers' investment threshold.
Qin Rui, a senior analyst with 5i5j, told Xinhua that some home buyers were "following the crowd" when buying apartments in February, March and April this year as they did in the property buying spree of 2007 when the market was strong.
"However, some cautious home buyers chose to wait and see for a while after observing what happened last month in Beijing," Qin added.
A report released by the PBOC last week on the basis of a survey in 50 cities nationwide showed that more than 60 percent of consumers considered current home prices "too high."
Qin said that only if investors and second-time buyers became the driving force of the property market could it be said that the residential property market was truly on the way back up.
But figures from 5i5j showed that the first-time home buyers were still the primary home purchase group, accounting for 37.21 percent of the total second-hand home buyers in Beijing in the eight months through May.
Investors accounted for 13.88 percent and those who were trading up accounted for 34.42 percent of the total.
The remaining 14.49 percent were those who bought second-hand homes for their elderly parents or so that their children could live closer to school.
(The authors are Xinhua writers.)
"Prices aren't low. But I'm afraid that if we don't decide to buy soon, prices will spike," Sun said, as she described her struggle to make ends meet in her daily life while saving for a home.
She plans to buy a one- or two-bedroom apartment on a mortgage that will run for more than 20 years. Borrowing some money from her parents, the couple will also use their hard-earned salaries to cover the minimum 20 percent down payment.
Sun is one of millions of potential home buyers who have been worrying about rising urban apartment prices since the Spring Festival in late January.
Chinese home prices began to pick up from one-year lows starting in February and home buying volume reached a record high in recent months.
Evidently, some buyers believed that prices had hit bottom at the start of the year. The situation has given Sun and other home buyers reason for concern.
Figures from the National Bureau of Statistics (NBS) showed that prices of new and existing homes in 70 large and mid-sized Chinese cities including Beijing, Shanghai and others fell 0.6 percent year-on-year in May, but prices still edged up 0.6 percent from April.
This was the third consecutive month that home prices had climbed month-on-month. Second-hand home prices showed a similar trend, analysts said.
Although no nationwide data were available, figures provided by Beijing-based 5i5j Real Estate Service Co showed that second-hand home prices rose 1.53 percent month-on-month to 12,712 yuan (US$1,859) per square meter in Beijing in May.
Chen Sheng, vice president of the China Index Academy (CIA), a private-sector research institute that specializes in real estate, told Xinhua that the signs of life in the residential property market largely reflected government stimulus policies for the sector and consumers' inflation expectations following a loan spike early this year.
Housing loans
China's new yuan-denominated loans reached 664.5 billion yuan in May, bringing new loans in the first five months to 5.84 trillion yuan, exceeding the full-year target of 5 trillion yuan. Loans to consumers topped 187.6 billion yuan last month, the People's Bank of China (PBOC), the central bank, said last Friday.
Of the total 187.6 billion yuan of consumer bank credit in May, 100.8 billion yuan was aimed at long-term housing loans, accounting for 53.73 percent of the total. The ratio was more than 10 percentage points lower than in April, showing more people were cautious about buying homes on installment, analysts said.
China announced at the end of May that, for the first time in 13 years, the minimum capital requirements for developers to start a new commercial property or an affordable housing project had been lowered from 35 percent of the total project cost to 20 percent, a move to reduce developers' investment threshold.
Qin Rui, a senior analyst with 5i5j, told Xinhua that some home buyers were "following the crowd" when buying apartments in February, March and April this year as they did in the property buying spree of 2007 when the market was strong.
"However, some cautious home buyers chose to wait and see for a while after observing what happened last month in Beijing," Qin added.
A report released by the PBOC last week on the basis of a survey in 50 cities nationwide showed that more than 60 percent of consumers considered current home prices "too high."
Qin said that only if investors and second-time buyers became the driving force of the property market could it be said that the residential property market was truly on the way back up.
But figures from 5i5j showed that the first-time home buyers were still the primary home purchase group, accounting for 37.21 percent of the total second-hand home buyers in Beijing in the eight months through May.
Investors accounted for 13.88 percent and those who were trading up accounted for 34.42 percent of the total.
The remaining 14.49 percent were those who bought second-hand homes for their elderly parents or so that their children could live closer to school.
(The authors are Xinhua writers.)
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