Within days of China’s authorities announcing another set of property cooling measures, thousands of people have been seen attending property shows across China.
Samsung Securities and Standard & Poor’s both expect a 10 percent decline in prices in first-tier cities in the next 6 to12 months due to the ongoing tightening measures.
Property agents, however, said initial signs imply that homebuyers are not taking the measures seriously. Nevertheless, the effects of the newest policy measures on sales will be determined after several weeks when new data is available.
Earlier attempts to control prices were not successful because homebuyers believed that local and central governments could not allow prices to decline as it would harm the nation’s economic growth.
In Shenzhen, over 200,000 people attended a five-day property show that started on October 1, while over 130,000 people went to a three-day housing exhibition in Shanghai. However, property developers said sales during the show were lower compared to last year.
Despite the large numbers of visitors, official figures show that the number of deals in some cities slid from the previous week. For instance, sales in Beijing averaged 116 a day from October 1 to 3, lower than the average during September 27 to 30, when 635, 852, 560 and 573 units were snapped up, respectively.
In Changsha located in the province of Hunan, home buying continued to be strong in October, said Helen Lin Hongmei of Henderson China. “Since Oct 1, we continue to have buyers signing contracts,” she said.
“Mainlanders reacted relatively calmly this time, compared with reactions in April,” said Xia Haijun, CEO and vice chairman of Evergrande Real Estate Group.
Commenting on the sales activity during the Golden Week holiday, he added: “Buyers did not disappear in a flash, as happened last time. Some buyers who needed flats to live in still came out to buy.”
The prediction that prices will not decline is also based on the belief that local governments, bankers and property developers had developed a mutually beneficial relationship in housing reform, thus, nobody wanted to see a decline in home prices.