First-tier cities could see boom in real estate

Night view of skyscrapers and high-rise buildings of Jianwai Soho and Yintai Center in CBD in Beijing. [Photo/IC]

China's first-tier cities are likely to experience a real estate boom, and analysts believe the property market is off to a well-grounded start this year as property group China Vanke Co plans to raise its property prices in Beijing.

Vanke, China's largest residential developer by revenue, will increase the prices on two projects in southern Beijing, according to a project introduction advertisement by the company.

However, it did not disclose the range of increase.

In Shanghai, meanwhile, the average price for new homes has grown by more than 10 percent in the past two months, from 42,300 yuan ($6,470) to 47,000 yuan per square meter, as demand remains robust with supplies going fast, according to data from real estate information platform anjuke.com.

Market professionals said existing inventories of available homes are being reduced at a rapid pace because buyers worry that if they don't buy now, prices will continue to rise and they will no longer be able to afford to buy.

Cao Xiaoliang, 38, the father of two boys, said he has had to drop his plan to buy a more spacious home because of the price hikes.

"It is so crazy that the price of a 100-square-meter apartment rises some 400,000 yuan in just 15 days after the Lunar New Year," said Cao.

Guo Yi, marketing director of the Yahao Real Estate Selling and Consulting Solution Agency, said the governmental measures released recently to boost the property market have a lot to do with the real estate price increases in first-tier cities.

Deed and business taxes for home purchases in most cities will be cut in an attempt to relieve the property glut.

For example, the deed tax on homes of more than 90 square meters will be reduced to 1.5 percent from the current 2 percent for first-time buyers in all Chinese cities.

"The series of policies indicate that the property market in 2016 will see a relaxed policy environment, which is expected to further stimulate more property developers to purchase more land," Guo said.

Analysts also said this trend may not benefit the market in the long term, because demand for trading up may be exhausted soon and solid demands for first homes are not met due to a gap of affordability as prices quickly increase.

Lu Chao, an analyst with Hanyuan Realty Co, said city authorities' decision to adjust land supplies may help the market become more rational.

The secondhand housing market is just as active as that for newly built apartments.