Chinese cities lift property price caps

China’s biggest cities this month lifted a price cap on home pre-sale licences. In an action likely to release blocked prestige high-end schemes, and further propel the property market, Chinese news reports said it would boost developers’ confidence about home price increases in major cities like Beijing and Shanghai, which are both in need of more housing.

Shanghai imposed an implicit limit on the price of new homes that could be approved for pre-sale in November. In one example, Shanghai media reports said it was set at 20,000 yuan (US$3,300.00) per square metre in the city’s Baoshan district. After the price of housing climbed more than 20 percent in the 12 months to October, Shanghai also intensified other measures to curb price rises.

“Beijing imposed a 40,000 yuan (US$6,600) per square metre price ceiling at a closed-door meeting with developers in November, while Shenzhen and Guangzhou took similar steps,” the South China Morning Post reported. “But this month, both Beijing and Shanghai gave the nod to expensive residential property projects, apparently removing the price limits,” the Hong Kong daily added.

A Beijing housing bureau source said efforts were underway to bring prices down further by building more homes as part of its plan to provide 50,000 new apartments this year to be priced 30 percent lower than those in the same neighbourhood.

Chinese analysts said this would bring housing policies in line with President Xi Jinping’s preference for market-oriented tactics whereby the central government has said it will let cities address their own housing problems without imposing nationwide policies.

Beijing gave this year’s first pre-sale licence to the Thaihot Cathay Courtyard project in Chaoyang district, with the highest price set at 100,537 yuan (US$16,600) per square metre for a house with a gross floor area of 352.54 square metres.

The South China Morning Post also said Sunac China, a Hong Kong-listed mainland developer, had been aggressively snapping up land parcels in prime locations in top cities.

A consortium led by Sunac bought a block of residential land in Beijing’s suburban Mentougou district for 5.87 billion yuan (US$970 million), a new record and 50 percent higher than the floor price of 3.91 billion yuan (US$646 million) through a public tender last month.

That followed the 4.3 billion yuan (US$711 million) purchase of a land parcel in central Beijing in September for more than 73,100 yuan (US$12,000) per square metre. Sunac founder Sun Hongbin said he expected the selling price would be at least 150,000 yuan (US$25,000) per square metre when the project was finished.