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CHENGDU: The appetite for owning property remains undiminished on the mainland, despite saturation news coverage given to moves by the government to hose down demand and rein in prices.
Chengdu resident Liao Fan is among those who refuse to be frightened out of plans to buy property because of concerns that prices may fall under the weight of concerted policy measures.
"Inflation is on the rise and the government keeps increasing money supply. How can I maintain my wealth if I do not buy physical assets?" asks Liao.
Since reading reports that inflation on the mainland jumped an annualised 4.4% last month, and money supply as measured by M2 soared 19.3%, the 25-year-old game shop owner has decided to buy a second flat as a long-term investment to secure her wealth against inflation.
That response helps explain why property demand and prices, especially in second and third-tier cities, have not fallen.
And that is despite the central government's Sept 29 policy measures that tightened home lending and directed city governments to limit the number of residences that citizens could buy if home prices had risen too quickly and to excessively high levels.
But while demand and prices are not falling, the measures have had some effect, and last month prices in the nation's 70 biggest cities rose at a modest 0.2% month-on-month rate, according to China Information News, the newspaper of the National Bureau of Statistics.
Prices were still up 8.6% from October last year, but that was down from an annualised increase of 9.1% recorded in September.
The continuing demand for property despite the policy measures is captured in the sales' data kept by China Overseas Land & Investment (COLI).
In Chengdu, Chongqing and Xian, COLI says, home sales volumes and prices have not been reversed by the policy measures, although the pace of growth has slowed.
Lee Wee Liat, the regional property head of Samsung Securities (Asia), also witnessed the strong sales demand in Chengdu on a recent trip. "Strong sales of Cosmos by KWG Property Holding came as the biggest surprise in our trip to Chengdu. It is the most expensive project in western China and is still selling well despite extensive news of policy-tightening measures," he said in a recent report.
The project achieved contracted sales of 150 million yuan (RM70.72 million) in the first 20 days of last month, which looked very encouraging, he said.
Guo Yong, an assistant president of COLI in charge of the group's Chengdu, Chongqing and Xian offices, said strong demand in the city resulted from residents who remained eager to own property.
Liao, meanwhile, does not believe tough measures will be introduced that will seriously affect demand in the city's housing market even though it has been rumoured that the city government will limit the number of home purchases that a single household may make, in line with the directive from central government.
"I believe the austerity measures will hit the property market elsewhere, but they will hit the first-tier cities, not here," Liao said.
"Prices here are just about 7,000 yuan to 8,000 yuan per square metre.
"In Shanghai, prices are 30,000 yuan a square metre. The government will hose down these red-hot markets first. We probably will become the target one day, but it will take years," she said.
"Half of our high-end homes (valued at 15,000 yuan per square metre or above) are purchased by buyers from Shaanxi province," said Wang Qi, the head of COLI's Xian office.
They are affluent coalfield owners, or owners of petrochemical or resources companies, who want to upgrade their living environment and give their children a place to stay when they study in the city.
"They are unsophisticated when it comes to investment. They have no clue about how to invest in the stock market. Buying property is their major investment tool," Wang said.
Continuing strong demand helped COLI's offices in Chengdu, Chongqing and Xian generate sales of HK$8.89 billion (RM3.59 billion) in the first 10 months of the year, reaching the full-year target set at the start of the year.
But COLI does have some concerns about the immediate outlook for the market and expects sales to slow in coming months when the full impact of the austerity measures has been digested, Wang said. — South China Morning Post
Chengdu resident Liao Fan is among those who refuse to be frightened out of plans to buy property because of concerns that prices may fall under the weight of concerted policy measures.
"Inflation is on the rise and the government keeps increasing money supply. How can I maintain my wealth if I do not buy physical assets?" asks Liao.
Since reading reports that inflation on the mainland jumped an annualised 4.4% last month, and money supply as measured by M2 soared 19.3%, the 25-year-old game shop owner has decided to buy a second flat as a long-term investment to secure her wealth against inflation.
That response helps explain why property demand and prices, especially in second and third-tier cities, have not fallen.
And that is despite the central government's Sept 29 policy measures that tightened home lending and directed city governments to limit the number of residences that citizens could buy if home prices had risen too quickly and to excessively high levels.
But while demand and prices are not falling, the measures have had some effect, and last month prices in the nation's 70 biggest cities rose at a modest 0.2% month-on-month rate, according to China Information News, the newspaper of the National Bureau of Statistics.
Prices were still up 8.6% from October last year, but that was down from an annualised increase of 9.1% recorded in September.
The continuing demand for property despite the policy measures is captured in the sales' data kept by China Overseas Land & Investment (COLI).
In Chengdu, Chongqing and Xian, COLI says, home sales volumes and prices have not been reversed by the policy measures, although the pace of growth has slowed.
Lee Wee Liat, the regional property head of Samsung Securities (Asia), also witnessed the strong sales demand in Chengdu on a recent trip. "Strong sales of Cosmos by KWG Property Holding came as the biggest surprise in our trip to Chengdu. It is the most expensive project in western China and is still selling well despite extensive news of policy-tightening measures," he said in a recent report.
The project achieved contracted sales of 150 million yuan (RM70.72 million) in the first 20 days of last month, which looked very encouraging, he said.
Guo Yong, an assistant president of COLI in charge of the group's Chengdu, Chongqing and Xian offices, said strong demand in the city resulted from residents who remained eager to own property.
Liao, meanwhile, does not believe tough measures will be introduced that will seriously affect demand in the city's housing market even though it has been rumoured that the city government will limit the number of home purchases that a single household may make, in line with the directive from central government.
"I believe the austerity measures will hit the property market elsewhere, but they will hit the first-tier cities, not here," Liao said.
"Prices here are just about 7,000 yuan to 8,000 yuan per square metre.
"In Shanghai, prices are 30,000 yuan a square metre. The government will hose down these red-hot markets first. We probably will become the target one day, but it will take years," she said.
"Half of our high-end homes (valued at 15,000 yuan per square metre or above) are purchased by buyers from Shaanxi province," said Wang Qi, the head of COLI's Xian office.
They are affluent coalfield owners, or owners of petrochemical or resources companies, who want to upgrade their living environment and give their children a place to stay when they study in the city.
"They are unsophisticated when it comes to investment. They have no clue about how to invest in the stock market. Buying property is their major investment tool," Wang said.
Continuing strong demand helped COLI's offices in Chengdu, Chongqing and Xian generate sales of HK$8.89 billion (RM3.59 billion) in the first 10 months of the year, reaching the full-year target set at the start of the year.
But COLI does have some concerns about the immediate outlook for the market and expects sales to slow in coming months when the full impact of the austerity measures has been digested, Wang said. — South China Morning Post
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