More cities ease limits on housing purchase

Prices unlikely to rebound in short period due to high inventory

Chinese city governments' recent moves of relaxing or withdrawing their home purchase limits are unlikely to lead to a rebound in home prices, and weak sales in second- and third-tier cities will not lead to a market collapse, industry watchers said Tuesday.

As of Tuesday, some 60 percent of the 46 major Chinese cities have relaxed or canceled their purchase limits implemented since 2011 as part of the central government's efforts to curb property speculation.

Hangzhou, capital of East China's Zhejiang Province, relaxed its home purchase limits on Tuesday to ease the problem of oversupply.

Local residents of Hangzhou, a second-tier city, will not be required to offer documentary evidence of any existing apartments owned by their families when they plan to buy apartments in Xiaoshan and Yuhang districts, according to a notice released by the Hangzhou Housing Security and Real Estate Management -Bureau on its Weibo late Monday.

Homebuyers who plan to buy apartments of areas over 140 square meters in downtown don't have to offer the documents, the notice said. That means Hangzhou has officially relaxed its home purchase restriction policies, which was implemented in March 2011.

Also on Tuesday, the housing authorities of Wenzhou, a city in Zhejiang Province, announced that it will withdraw its home purchase limits, allowing its local residents to buy apartments without offering home ownership documents, according to local media reports.

Prompted by rumors of possible cancellation of home purchase restrictions right before the official announcement by the Hangzhou housing department, the sales of some luxury apartments saw an obvious rise last week. "We sold eight units of apartments with prices exceeding 80 million yuan ($12.9 million) per unit in the past one week, compared with six units in the first six months of this year," a salesman was quoted by the local media as saying on Tuesday.

But analysts said a sudden rebound in home prices is unlikely due to the oversupply of apartments.

It will take "around 20 months" for the city to clear all of its housing inventory, Yang Hongxu, vice president of Shanghai-based E-house China R&D Institute, told the Global Times on Tuesday.

Echoing the views of Yang, Liu Yuan, senior research manager at Centaline Property Agency in Shanghai, said that "prices are not likely to rebound any time soon as the room for growth in demand in major second- and third-tier cities is small after around six years of fast expansion."

The accumulated average sales area of new apartments per resident in Hangzhou has almost doubled since 2008, hitting around 11.1 square meters in 2013, much larger than around 9 square meters in the first-tier cities like Beijing, according to a report by Centaline Property released in June.

A total of 23 out of the 40 major second- and third-tier cities, such as Guiyang and Chengdu, have seen their average sales areas of new apartments per person already exceed or get close to that of the first-tier cities including Beijing since 2008, the report said.

"In the future, the demand in major second- and third-tier cities like Hangzhou will rise slowly due to a slower growth of population compared with the first-tier cities," Liu noted.

The four first-tier cities -Beijing, Shanghai, Guangzhou and Shenzhen - are not likely to relax their home purchase limits before the end of this year because of the large demand for homes in these cities, according to Yang of E-house China R&D Institute.

"Property markets in some second- and third-tier cities also will not collapse despite poor sales," Liu noted.

The Chinese Academy of Social Sciences predicted in a report released on Monday that prices of ordinary apartments nationwide will remain stable in the next two to three years due to oversupply of new homes accumulated since last year.