Both consumers and developers are adopting a 'wait and see' approach to the Dalian's property market.

Evidence of this new attitude was clear at a recent real estate fair held one month after the issuing of new real estate policies on June 1.

A total of 54 companies attended the fair, showcasing 60 real estate developments, of which 28 were new. Many developers had been expecting the fair to be an opportunity to promote a fresh round of increased housing prices.

"The situation is not as good as at the spring fair in March. More consumers are hesitating because of the country's obvious intention to curb rising property prices," said He Zhuang, sales manager of Dalian Honglin Real Estate Developing Co Ltd.

Total sales volume at the fair was 1,151 commodity houses, covering an area of 102,400 square metres. The total turnover was 420 million yuan (US$51.85 million), 150 million yuan (US$18.52 million) down on the last fair.

"Consumers were being more sensible, wanting to buy apartments priced at around 350,000 yuan (US$43,200)," He said.

Many visitors to the fair gathered in front of booths exhibiting properties priced lower than 4,000 yuan (US$493.83) per square metre. Few people paid attention to the more expensive properties.

Zhou Wei, who graduated from college a year ago, plans to buy an apartment of around 130 square metres. He told China Daily he will wait until September, in the hope that property prices will fall.

The average transaction price at the fair was 4,100 yuan (US$506.17) per square metre, 273 yuan (US$33.7) down from the last fair.

Statistics showed that the most popular purchases were medium-and-small-sized downtown apartments, and suburban houses, priced lower than 4,000 yuan (US$493.83) per square metre.

Some buyers believed that prices for property in suburban areas would grow in the future.

Wang Qingzhi, general manager of Jiaxing Peaceful Real Estate Marketing Co Ltd, said during the fair that they had received more than 700 passengers per day for their special bus to Lushun, a suburb where they offered houses at 2,080 yuan (US$251.21) per square metre. Sales of these units topped 30 million yuan (US$3.62million) in four days.

The buyers were mainly investors who saw potential for an increase in value, and senior citizens, who planned to spend their retirement there, according to Wang.

During the fair, 296 second-hand housing units were sold, with a combined area of 21,300 square metres and total cost of 62 million yuan (US$7.65 million). The number of second-hand units sold dropped 50 percent from the spring fair. However, the unit price increased slightly from 2,800 yuan (US$345.68) to 2,925 yuan (US$361.11) per square metre.

Yuan Xiaoji, marketing manager at Haowangjiao, a real estate agent with 75 outlets across the city, said that a decrease in second-hand sales was an expected result of the central government's policies. She believed that prices would rise steadily.

Yuan told China Daily that the policy would drive unqualified real estate agents out of the market.

In line with the central government's tough measures to curb the real estate boom, the local government also released regulations in early June.

Under the new regulations, buyers have to pay a 4 percent stamp duty on new or old commercial housing, if the price is over 8000 yuan (US$987.65) per square metre, or covers an area of more than 144 square metres.

Cong Changlin, a projector with Yida Real Estate Co Ltd, told China Daily that the effects of this new policy are still unclear.

He said the policy would not affect sales volume, as prices are still reasonable. Houses in northeast China are mainly bought for living, rather than speculation.

He said that commercial housing sales decreased and second-hand sales increased in the first half of this year, because new building supplies are not sufficient. This insufficient supply is a result of the local government's control of the land.

On May 30, 500 second-hand housing units changed hands, 3 times the usual rate, as people rushed to sell their properties before the new regulations came into place on June 1.

Xu Zhongliang, sales manager of Fortune Plaza, said the city's real estate market is in good shape, and running parallel with the city's development, unlike the situation in east China's Shanghai and Hangzhou.

Xu expected that the price of houses over 7,000 yuan (US$864.2) per square metre would fall in the next two to three years, while those priced 2,000 to 3,000 yuan (US$246.91-US$370.37) per square metre would increase.

To meet the housing needs of low-income families, the government started low-cost housing construction in July. The project covers 280,000 square metres, and is expected to be in use from October 2006. A total of 64 buildings will be built, with 5,839 housing units ranging from 50 to 100 square metres.

Sources from the Municipal Land and House Office said the average price for this low-cost housing would be 2,500 yuan (US$308.64) per square metre. However, Cong Changlin said the living environment would be poor, and those wanting to live there would not be able to afford it.

(China Daily August 2, 2005)