Beijing's recent measures to cool down its overheated property market will help it build a healthy real-estate sector in the long term, according to an industry expert.

 

"We think that the new regulatory policies will lead to the long-term healthy development of the mainland's property market," said Raymond Ho, Executive Director of Vigers Appraisal & Consulting Ltd.

 

"They will help people, especially those with low incomes, solve their housing problems and help increase the transparency of foreign investment in the real-estate market while making it hard for short-term speculators to make profit in the market," Ho added.

 

Ho's remarks came not long after Beijing launched a series of measures in late May and late July respectively to contain excessive growth in the property market.

 

In the short term, however, Beijing's new measures would drive down the residential transaction volume and the average selling price, especially in the larger cities.

 

"We have recorded a distinct decrease in the transaction volume of residential properties in Beijing, Shanghai and Shenzhen," Ho said.

 

"Beijing's newly introduced measures seem to have worked well so far in three overheated cities," he said.

 

As a Viger's report revealed, both Beijing's and Shenzhen's transaction volume in residential properties fell by 20 to 30 percent in June. The figures compared to an 8.2 percent and 14.6 percent increase in residential property prices in Beijing and Shenzhen in May, respectively.

 

"The mainland's property boom went on until mid-May when Beijing released six policies to rationalize its overheated property market," said Ho.

 

"With the new policies in place, many people had to adjust their previous buying or investment plans, while others simply adopted a wait-and-see attitude."

 

Shanghai, which saw its residential market reach its peak in April and early May, also recorded a tremendous decrease in its residential transaction volume in June, falling by 45 percent from the previous month.

 

"The transaction volume in Shanghai reached 23,596 in April, followed by 25,366 in May," Ho said. "But soon after the new measures were launched, the transaction volume in June dropped to 13,809."

 

Ho believed that further reduction of both the residential transaction volume and residential average selling price was likely to occur in Beijing, Shanghai and Shenzhen in the second half of the year.

 

(China Daily August 4, 2006)