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The government's macro-control measures to stabilize house prices have temporarily cooled rocketing prices in this coastal city of east China's Shandong Province.
Both house sellers and buyers are holding back to find out what will happen because of the measures brought in since June 1. Many house owners have decided to rent out their houses.
"Many house buyers have cancelled orders for homes made earlier this year," said a agent of a major local real estate project who was reluctant to give his name. Even those who have put down a deposit on a home through a "backdoor" route have also given back word.
This is usual now no matter whether the project is in the city centre or the suburbs.
Lin Hui, 35, is one of the buyers who abandoned their plans to buy after the central government's policies were implemented last month.
The local shipping company worker had long planned to buy a larger house so he could move out of the 60-square-metre home that his family is living in.
"I am so happy that I did not buy the house in February. But if houses get a little bit cheaper I will immediately buy one" Lin said.
Experts attribute such a phenomenon to new measures adopted by local governments in late June to enhance the healthy development of the market.
Such measures include tightened management over the pre-sale of houses, further supervision over housing agents, controls over the renting market and the promotion of online selling.
Such measures also forced many housing speculators to leave the market. Even those still investing are more cautious when buying and selling, said Zhang Mige, a market manager at Qingdao Qidian Real Estate Agency.
Statistics show that in the fourth quarter of 2004, Qingdao house prices rose by an average of 19.8 percent from the same period in 2003, the largest hike among the nation's 35 large and medium-sized cities.
Qingdao's property prices are almost on a par with Guangzhou, but the average income of salaried workers in the city is just half that of the capital of Guangdong Province.
From June 1, the government began to levy a 5 percent tax on the full earnings of home sales when owners sell on within two years of buying. In March, the People's Bank of China, the central bank, ended its preferential loan policy for mortgages, raising interest rates on mortgages over more than five years by 20 basis points to 5.51 percent.
Under the new policies, house developers are taking a wait-and-see attitude too. Some have taken no action even though they originally planned to raise their prices. However, most of them are not prepared to cut their prices as they fear this may lead to buyers expecting further cuts.
"I think the new policies are designed to stop excessive house speculations," said Duan Tao, General Manager of Qingdao Guangyu Real Estate. "We don't like the speculators either. We want to sell our houses to real residents. I am confident about Qingdao's real market. The two-year threshold is reasonable and will help produce a stable and healthy housing market."
He added that the policies do not directly decide housing prices, with supply and demand being the final determinant.
He said he believes the government's moves to build more small and medium-sized apartments, and more affordable houses, will help lead to rational market growth.
Insiders say that Qingdao's housing market is now stable, with no obvious price moves in the past month, although new houses in a sound location, and with a good environment and reasonable price are still selling well.
Take the TOP Yihe International CBD for example. As one of the most modern buildings along Qingdao's prosperous Xianggang Zhonglu Road, prices have reached an average of 13,000 yuan (US$1,572) per square metre.
A sales manager surnamed Li said that his sales volume in June was not affected by the new measures. Since homes in the project went on sale last November, 80 percent of its apartments and half of the office units have been sold.
(China Daily July 20, 2005)
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