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Most major Chinese cities saw a booming real estate market in June, with some hinterland cities recording double-digit growth rate in their housing prices, indicates an authoritative industrial report.
The China real estate index, released by Soufun.com Academy, shows that the property indices of Beijing, Tianjin, Shanghai, Chongqing, Shenzhen in Guangdong Province and Chengdu in Sichuan Province all grew significantly in June. But Guangzhou, the capital of south China's Guangdong Province, suffered a slight drop in the month.
Soufun.com is China's largest property Internet portal, and Soufun.com Academy is its research department.
The index takes into account property prices, sales volume and consumer confidence and is considered to be an authoritative indicator of the performance of the Chinese real estate market. Prices are its main reference factor.
Investment in real estate in China in the first half of the year was 492.4 billion yuan (US$59.5 billion), up 28.7 percent from the same period in 2003, but 12.4 percentage points less than the growth rate in the first quarter.
Among major Chinese cities, the real estate markets of the southwestern municipality of Chongqing and the major metropolises of Shanghai and Beijing were the most robust.
At a major real estate fair held in Chongqing in May, the average trading price was 3,100 yuan (US$374.39) per square meter, rising 642 yuan (US$77.53) per square meter, a year-on-year rise of 26.1 percent.
The momentum continued into June. Chongqing's real estate index rose 17 points to 599 in June. The municipality's housing index rose 21 points to 425, or 4.94 percent.
In the second quarter, Shanghai's property price grew 21.4 percent year-on-year, according to the survey of the National Bureau of Statistics.
In the first half of this year, Shanghai's real estate authorities recorded 14.7-million-square-meter sales of new property, rising 15.3 percent over the same period of last year. The trading volumes of second-hand housing reached 13.03 million square meters, the highest in history.
Shanghai's property index rose 9 points to 1,213 in June. The municipality's housing index rose 9 points to 1,188.
But starting in June, Shanghai residents adopt a wait-and-see attitude due to the rapid price growth and growth momentum slowed down, as the index indicates.
In June, Tianjin's property index rose 7 points to 698. Although the growth rate slowed as compared to previous months this year, Tianjin's real estate market has shown a continued upward trend over several years, something which is rare in other major Chinese cities.
The slowing growth rate in Tianjin was partially caused by new policies to regulate the real estate market in Tianjin, which are measures taken to help the long-term sound development of the local property market.
In early June, the Tianjin municipal government released a circular to ban property pre-sales without government permission. The circular affected local real estate market as property pre-sales before obtaining government permission had become a popular practice in Chinese cities. Real estate developers use this sales method to reclaim their investment as soon as possible.
Due to the low-price of Tianjin's properties -- whose average price was only 3,151 yuan (US$380.55) per square meter after climbing 25.4 percent year-on-year -- the property market in the municipality continues to have the biggest potential among major Chinese cities, said Li Lifang, Tianjin-based Soufun.com Academy's analyst.
China real estate index indicates that Beijing's property index rose 10 points to 1,177 in June. According to the Beijing Bureau of Statistics, in the first half of this year, Beijing's average property price was 4,949 yuan (US$597.71) per square meter, rising 7.3 percent over the same period of last year.
The statistics bureau's figure is different to the reports of many real estate consultants as it takes all suburban housing into account. Hong Kong-based DTZ Debenham Tie Leung's report indicates that the average price of common housing was 5,838 yuan (US$705.07) per square meter in Beijing in the first half of 2004.
Beijing's rising property price is mainly due to increased foreign investment which brings more foreign dwellers, the tight land supply policies and credit, as well as the good news from Olympic infrastructure development.
In addition, the rumored ban on construction projects in 2007 in Beijing -- in order to ensure the progress of Olympic projects and reduce pollution -- also stimulates market demand, said Zhao Liyi, chief analyst of Soufun.com Academy.
(China Daily August 10, 2004)
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