A real game of monopoly
- Source: Global Times
- [16:16 March 16 2010]
- Comments
By Xu Huixian
A growing number of local developers are keeping properties off the residential market in order to rake in more profits from buoyant prices in the future, according to Shanghai Real Estate Trading Center on Monday.
Skyrocketing house prices became one of the hottest topics during the annual session of National People’s Congress as it closed on Sunday. Cui Jie, delegate of National People’s Congress, noted that one of the ways to cool down the heated market is to increase property supply.
However, the housing supply plunged this year. In February, the gross floor area of new homes on the market fell dramatically, over 100 percent to 220,000 square meters from the same period in 2009, according to Uwin Real Estate Research Center, a leading property research organization in Shanghai.
Even though the construction of some residential complexes has finished, developers don’t put their products on the market immediately, such as Zhong Xin Mei Hua Village by Shanghai Zhong Xing Group, and Shanghai Hong Kong New World Garden Phase II by New World China Land.
“This is because they are reluctant to price their products due to profit concerns,” Lu Qilin, deputy director of Uwin, told Global Times yesterday.
Developers have to sell residential properties ten days after they get the sales certificates issued by local authorities, according to a statement from the Shanghai Municipal Housing Support and Building Administration Bureau.
But currently there is no punishment if developers violate those rules.
“Another way to hold property off the market is to price houses unreasonably high,” Lu added.
For example, Ding Garden on Zhao Jia Bang Road in Xuhui district, developed by Shanghai Hui Feng Real Estate Company, was priced at 18,000 yuan ($2,647) per square meter at the opening in 2005, but now its price stands at 46,000 yuan ($6,765) per square meter.
Another case is Xiang Yu Garden in Songjiang district, which is now priced at 19,000 yuan ($2,794) per square meter, more than two times last September, according to the owner, Shanghai Yunjiang Developer.
Lu noted that the local government can also benefit from such actions since more transaction taxes can be collected, and land transfer revenues will surge if the housing prices increase.
