New cooling measures result in rush of sales of luxury property in China
The implementation of further tightening measures by the central government in China is expected to slower the pace of luxury residential price growth in 2013.
But it will not reverse the upward trend, according to the latest Greater China Property Market report from Knight Frank covering the first quarter of the year.
It shows that in Beijing the luxury residential supply fell over 30% quarter on quarter during the traditional low season.
However, luxury residential sales were hot despite the traditional off season and sales in March hit a new high for the last two years. Residential supply started to rise in March and is expected to go up further in the second quarter.
Due to tougher control policies taking effect at the end of March, the market saw panic sentiment and transactions were accelerated, resulting in a rapid rise in transaction volumes in the city.
In Guangzhou luxury residential supply fell by 8.6% quarter on quarter. Sales surged 46% quarter on quarter and the report says that new supply in down town areas was limited. The surge in sales was attributable to notable market recovery and panic buying driven by the announcement of the new measures.
In Shanghai new luxury home supply reached 234,000 square meters, a quarter on quarter increase of 67%. In March, new luxury home sales rebounded to 49,600 square meters to a new high for the last six months.
Newly launched projects included The Eight in Putuo District and The View in Hongkou District, providing 510 and 642 apartments respectively. Both sellers and buyers rushed to close the deals before the implementation of the new measures so secondary home sales surged, the report points out.
In Hong Kong sales of luxury homes worth HK$10 million or above dropped 17.8% quarter on quarter to 1,740 in the first quarter. Luxury residential prices and rents grew merely by 1.1% and 0.4% quarter on quarter respectively.
Knight Frank says that much of the surge in sales was due to five new measures being introduced by China’s State Council in the first quarter of 2013 aimed at further tightening regulation of the residential property market.
As a result purchasing power shifted to the commercial market, which is not subject to the same restrictions as home purchases, pushing up commercial prices and transaction volumes. Meanwhile, the Grade-A office leasing market remained stable, with rents in Beijing, Shanghai and Guangzhou similar to those in the previous quarter, following continued growth over the past few years.