March property sale volumes surge in Zhongshan

Property transaction volumes in Zhongshan, Guangdong province, surged in March after local authorities increased the maximum price of new residential housing a month ago, despite a nationwide drop in property prices and transaction volumes.

The maximum price of new houses in the city jumped from 5,800 yuan (920 U.S. dollars) per square meter in November to 6,590 yuan per square meter in February, according to sources with the local housing and urban-rural development bureau.

The price surge has not dented local residents' enthusiasm for buying newly built houses, with transaction volumes increasing 58.2 percent last month to reach 500,000 sq m, a record high since the city introduced the curbs last November, according to statistics from the Zhongshan land resources bureau.

"The increased transaction volume was due to purchases of houses accumulated a few months ago. Many residents had adopted a wait-and-see attitude after the restrictions were introduced," said Lu Dehua, director of the Zhongshan housing and urban-rural development bureau.

Local authorities implemented a short-term price restriction policy on Nov 10 last year, which set a maximum price of 5,800 yuan per sq m for new residential accommodation.

The restrictions proved effective, with the average price of a newly built home increasing 12.56 percent year-on-year to reach 5,935.6 yuan per sq m last year, said Lu.

Some insiders expressed concern that there would be a further increase in the maximum price of new residential houses as a result of the increased transaction volume.

But Lu said the transaction volume had no relation to the adjustment of the maximum price.

"Currently, we don't have any plans to adjust the maximum price in the second half. If transactions are at a higher price than the current standard, they will not be approved," he said.

After the implementation of the price restrictions, the average price of housing in Zhongshan jumped from 4,613 yuan per sq m in January to 5,206 yuan per sq m in February.

However, the increased maximum price in February did not drive up the price in March, which averaged 5,001 yuan per sq m, sources with the local land resources bureau said.

Bran Chan, director of the research and advisory department of Colliers International (Guangzhou), attributed the increased transaction volume to relatively relaxed credit policies and discounts offered by developers.

"After the nationwide restrictions, developers had to offer discounts to sustain their business. Thus, many cities have seen a big surge in the transaction volume of new residential properties," he said.

In April 2011, the government started to restrict residents in 43 major cities from buying second or third homes, effectively bringing down property transaction volumes in many cities.

Sources with the National Bureau of Statistics indicated that 52 out of a statistical pool of 70 major cities in December saw drops in new home prices from November.

"The housing market will continue to fall and discount sales will also be inevitable in the months to come, despite the rising number of house purchases," Chan said.