Chinese govt measures to boost property market not having much effect yet

Efforts by the Chinese government to boost the country's property industry are not having much effect yet, according to the latest figures.

Last month the Ministry of Finance announced measures including lowering the property tax for first time buyers, but they have yet to filter through.

Property prices in China's 70 large and medium-sized cities rose 1.6% year-on-year in October, the lowest growth rate since 2006, according to the National Development and Reform Commission.

Shenzhen, with a price drop of 15% year-on-year for new residential housing and 17.4% for pre-owned housing, saw the biggest decrease in the country.

Property prices in Beijing and Shanghai experienced declines of 0.2 and 0.4% compared to September, but still maintained positive year-on-year growth of 5.2 and 0.4% respectively.

But there is evidence that the government's efforts could bear fruit. The number of transactions is increasing in some key cities and this is put down to the government's package of measures to revitalize the property market. Figures from the Beijing Real Estate Transaction website show that 1,188 pre-owned houses changed hands in Beijing in the first week of this month, compared to 499 in the last week of October.

'The government's efforts are aimed at protecting the property industry rather than preventing further declines in property prices,' said Qin Xiaomei, research chief at CB Richard Ellis' Beijing branch.

Due to people's conservative expectations of China's economic growth in 2009, Qin said the wait-and-see attitude in the property market may persist to early 2009 and the market is unlikely to rebound in the short term.

The high-end property sector, which was little affected in the first half of the year, also saw a big drop in prices in the third quarter, according to the latest Jones Lang LaSalle report.

The average price of Beijing's high-end residential apartments fell 5.5% quarter-on-quarter from July to September, the first time since the first quarter of 2006.

'The fall in high-end apartment prices suggests that the top end of the market is not immune to the overall downturn and it may be a sign of the likely direction of the market,' said Denis Ma, Head of Research of Jones Lang LaSalle Beijing.