Cities miss home price deadline
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Only roughly one-eighth of Chinese cities revealed their property price-growth targets on Thursday - the deadline set by the central government. However, industry analysts said a move such as targets is unlikely to curb property price growth.
Among all the cities that revealed their targets this year, Beijing is the only one that is aiming to see a decline in prices.
Some cities, including Shanghai, Guangzhou and Hangzhou, aim to allow property prices to grow slower than the city's GDP or the per capita annual income of urban and rural households. Given that scenario, industry analysts estimate that the property prices would grow at between 10 percent to 15 percent this year.
Some cities are striving to achieve a growth rate lower than the national average. Others, especially third- and fourth-tier cities, are planning to achieve a price growth rate lower than that of last year. Yushu, a small city in Jilin province, was able to tolerate a growth rate as high as 50 percent this year because its property price jumped by 50.5 percent in 2010.
According to Pan Shiyi, chairman of SOHO China Ltd, the fundamental reason for such a "vague" target is that land revenue remains the biggest contributor to local administration finances.
The central government required all local authorities to set their annual home-price control targets by the end of March, as one of a range of measures designed to cool the nation's overheated property market.
Compared with other measures, such as limiting the number of homes each family can purchase and raising the downpayment for second-home buyers to 60 percent of the full price, this move is unlikely to cool the market effectively, said Carlby Xie, head of research and consulting for North China at Colliers International.
Though a nationwide decline in property prices has yet to emerge, the country's leading property developers have altered their strategies to suit the times.
"Compared with the policy tightening in 2008, this round of adjustment relies heavily on administrative measures and thus will affect all lines of business in the residential sector," said Ding Changfeng, executive vice-president of China Vanke Co Ltd. He added that the company will be more cautious in acquiring land parcels this year, will seek to reduce sales targets, and increase investment in technique innovation.
Hong Kong-listed Beijing Capital Land Ltd has strengthened its exploration in the commercial sector. It plans to invest 30 billion yuan ($4.5 billion) to open five flagship outlets in the country's major regions and set up 30 outlets across the country within 10 years.
"Facing such rigorous tightening, a strategy reshuffle is necessary for every residential property developer," said Wu Huailiang, executive vice-president of Outlets (China) Ltd.
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