China's recent moves to ease curbs on the real estate sector have sent prices soaring recently, stoking fears that new property bubbles are forming, state media reported Friday. Residential property prices in Beijing's Central Business District rose 6.5 percent in the past week and demand for second-hand houses in some other areas is four times the supply, said the China Daily, citing brokerage Homelink.
It said a land parcel in Beijing, which was withdrawn from a public tender due to a lack of bidders only 15 months ago, was auctioned off Monday for a record 585 million dollars.
"The bidders have gone irrational. A bubble in Beijing's property market is definitely there," Pan Shiyi, one of the bidders that day and chairman of leading developer SOHO China, said after the auction, according to the report.
In Shanghai, developers of the luxury Tomson Rivers apartments, priced at over 14,600 dollars per square metre (about 1,360 dollars per square feet), sold at least 10 units in June, the report said. That compared with sales of only four units since the project was marketed four years ago, it added.
In the southern city of Guangzhou, the downtown housing price reached 1,600 dollars per square metre in May, close to the record high of 1,700 dollars in October 2007, the report said. "One thing we are concerned about is whether there is a new bubble being shaped," the report quoted Gu Yunchang, secretary general of the China Real Estate Association as saying. "The possibility of a bubble is pretty big." China's house prices have been rising fast in recent years with the country's economic boom.
The trend accelerated in 2006 and 2007, partly spurred by a growing stock market that prompted investors to place their windfalls in property. As a result, the average home price in Beijing was 23 times a local family's average income in 2007, compared with levels of four to six times average incomes internationally, state media reported.
Fears the property market would suddenly collapse, Beijing launched a number of measures from September 2007 to curb speculation, including raising downpayments on second homes and banning loans to developers for land purchases. The policies affected the industry severely, causing sales to slump and house prices to drop in dozens of major cities.
However, the financial crisis has forced authorities to relax the curbs, with local governments relying on preferential policies to boost demand. Stamp tax on property purchases and value-added tax of land on property sales was lifted from November 2008 and minimum deposits for first-time home buyers was also slashed.
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