Property transactions soared over the past quarter in major cities on the Chinese mainland, but analysts are divided on what has led to the sales pickup.

According to statistics from Real Estate Information Circle of E-House China R&D Institute, during the first quarter of this year, commercial property sales in Beijing, Shanghai and Shenzhen all exceeded the growth rate of the same period in 2008.

During the first quarter, the total floor space of commercial residential space sold in Beijing was 2.951 million sq m, up 54.6 percent year-on-year; in Shanghai it was 2.817 million sq m, up 34 percent year-on-year, while in Shenzhen, the southern city which was hit hardest in last year's market slump, the trading volume soared 239.42 percent over 2008 to 1.688 million sq m.

This property sales spree was for a large part triggered by a lower mortgage rate, said Jing Ulrich, managing director and chairwoman of China Equities with JP Morgan, Hong Kong. Since September last year, benchmark interest rates were lowered five times before settling at 5.31 percent.

"A large quantity of the sales are contributed by the rigid demand coming from marriage or housing improvement, and that's why we have seen that most of the houses sold are priced at the mid- to low-level," Cheng Sheng, director with the China Index Academy said.

"I won't take the recent swollen transactions as a sign of warm-up. Let's wait for another month or two to see if this trend continues," said Albert Lau, managing director, Savills Property Services, Shanghai. "During that process, it requires the subtle tie-in of governmental policies."

According to Colliers International' research, the full year will see an increase of housing transactions while average housing prices will adjust steadily.

(China Daily April 7, 2009)