With a slew of restrictions rolled out in China last year, developers are beginning to feel the heat.
Developers in China have been delaying the launch of new home sales, in the hope that buyers will clamour to purchase new homes once the government starts to ease the tightened measures it rolled out for the property market, reported Reuters.
A senior executive of a Shenzhen-based developer, who declined to be named since the matter is sensitive, said they will delay the sale of higher-margin prime developments, like sought-after apartments on top of metro stations, should the local government decide to prolong price caps.
Last year, the Chinese government introduced restrictions on the property market after home prices skyrocketed, with the measures including land and home purchase restrictions.
Price limits on sales were also imposed by the local authorities, whereby a developer’s selling price is capped at a certain percentage increase over that of a nearby development.
Based on official data, 70 cities saw average home prices climb by just 0.2 percent in January from the previous month, a moderation in price growth for the fourth consecutive month.
Industry officials attributed the slowdown to the price caps introduced by different cities, and not to weakening demand. According to them, demand remains healthy as evidenced by the increase in prices of previously owned homes.
“We just wait and we won’t sell now,” an official of a Shanghai-based developer said, referring to a development within the city. The official declined to be identified as the issue is sensitive.
“We’re in no rush (to sell) but realistically we can’t wait too long; one year is not possible…It’s a game with the government,” noted the official.
“For developers who have inventory pressure and want to build good relationships with the government in order to have better land access in the future, they may compromise. But some are willing to wait to seek higher profits.”
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
