Foshan Postpones Easing Property Measures
SHANGHAI—Foshan in southern China’s Guangdong province announced late Tuesday that it postponed the easing of its property tightening measures it had announced earlier in the day. They seemed to of jumped the gun.
Foshan decided to postpone these easing measures to seek further public opinion and to make a comprehensive assessment on the effects of such measures, Foshan’s housing ministry said in a statement on its website, which didn’t provide further details. They were hoping for an ease and they wanted to but it did not happen.
Foshan had been the first city in the country to announce an easing of its curbs on the property market amid mounting concerns that the once red-hot real-estate sector is in trouble. The moves were going to include a relaxing of restrictions on purchases of multiple homes.
Since early last year, authorities have been struggling to engineer a soft landing for the property market, which is crucial to the China growth model and directly affects the huge construction sector. The odds of getting a bank loan for an apt is real hard in Shanghai now.
Some analysts have cautioned that China’s property market may be reaching a “tipping point” and said they expect authorities to start relaxing or fine-tuning controls in the coming months. They have to ease up soon or the real estate builders will have problem repaying the loans they took out to build the properties.
Shares of China developers have slumped of late in Shanghai and Hong Kong, and investor confidence has taken a hit.
Private data provider China Real Estate Index System said property sales in big cities during the “Golden Week” holiday in the first week of October fell sharply from a year ago.
It also reported that average housing prices declined for the first time this year in September, normally the strongest month of the year, as prices in 100 cities in China slipped a modest 0.03% from August.
Meanwhile, China Vanke Co., the country’s largest property developer by market share, reported its second straight month of lower property sales in September compared with the previous year, citing the government tightening measures as a cause of the drop.
Vanke’s sales in September fell 12% on the year to 12.51 billion yuan.
Vanke board secretary Tan Huajie said in a statement the tightening measures have caused sales to slow, while inventories are rising in major cities and “characteristics of a buyers’ market are increasingly evident.” If China eases loans again the real estate market will take off again, since the interest rate in the bank is low.
“In the current market, having ample liquidity is one of Vanke’s big advantages, but Vanke will not change its conservative approach to buying land,” said Mr. Tan, adding there hasn’t been a clear decline in land prices yet.
China’s property market is also facing an unfavorable credit market as “it’s close to the year-end and banks are more reluctant to lend even to qualified buyers if they have reached their lending quotas,” said Danny Bao, an analyst at Daiwa Capital Markets. Shanghai real estate has slowed down, loans are harder to get.
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