The tough measures implemented by the Beijing government to cool down China’s buoyant real estate market have yet to create an impact on property prices.
According to a recent study conducted by property agency Knight Frank, average price of new homes rose 2.9 percent in 10 key cities in China from September to October, despite benchmark interest rates being raised during the period.
“On the price front, only Hangzhou saw a slight month-on-month price drop, while prices continued to rise in other cities, demonstrating that the new measures have yet to have a significant impact on prices,” said Knight Frank.
Second-tier mainland cities saw its sales least affected by the new tightening policy, said Knight Frank. Wuhan posted the biggest monthly price increase for new homes at 9.2 percent, while prices in Tianjin and Beijing rose 4 percent and 4.6 percent, respectively.
Most major cities, except Hangzhou and Beijing, saw an increase in the number of purchases. In Guangzhou, the number of transactions in October was 50% higher than in September, and sales in Chengdu rose by 37.7%.
“The new round of policy tightening is aimed at curbing home purchases for investment purposes,” said Knight Frank. “In first-tier cities, where significant proportions of buyers are investors, transaction volumes have been markedly dampened by the policy, whereas in second-tier cities, where the majority of buyers are end-users, sales have been less affected.”
Among the tightening measures announced by the government included an increase in benchmark standard rates by the People’s Bank of China, an increase in reserve ratios, as well as two mortgage rates hikes.
The China Securities Regulatory Commission has also suspended rights issues by listed property developers, while many commercial banks have restricted lending to developers.