Luxury homes make comeback in China

In China, March usually witnesses a surge in home sales after a subdued market during the first two months, as people postpone buying before and during the Lunar New Year, which fell on Feb. 19 this year. More than 246,000 homes were sold in January across the 54 major Chinese cities monitored by real estate service firm Centaline Group, down 20 percent from a month ago. The drop is steeper in first-tier cities, at 30 percent. But a flurry of luxury homes is leading an across-the-board surge of new home supply in China's housing market. According to real estate information service firm Soufang, more than 4,000 new homes will hit the Shanghai market in March. In Guangzhou, capital of south China's Guangdong Province, the number of new homes hitting the market rose to a 12-week-high of 4,238 in the week ahead of the Lunar New Year. Though home prices in the country's 70 large and medium-sized cities monitored by the National Bureau of Statistics extended a downward trend in January, those in first-tier cities are holding up well. Prices in southern metropolises Guangzhou and Shenzhen edged up 0.2 and 0.3 percent in January. Prices in Shanghai stayed flat, while those in Chinese capital Beijing were pared less than 0.2 percent in the same period. A development in which homes are priced at 145,000 yuan per sq meter became the first luxury residential complex to be approved for sale in Beijing in 2015, when regulators gave it the nod shortly before the Lunar New Year. Of the 42 new properties expected to open for sale in Beijing this year, 17 will go on the market for more than 50,000 yuan per sq meter, a widely recognized threshold for high-end properties, according to Beijing-based real estate consultancy Yahao. In Shanghai, luxury homes have also outperformed the city's entire housing market in 2014. A number of properties in which most homes cover more than 200 sq meters are slated to hit the market this year. The average price of high-end apartments in Shanghai reached 68,100 yuan per sq meter during the last three months of 2014, up 8 percent from the same period a year ago, said Siu Wing Chu, deputy managing director of real estate service firm Savills. "Cities like Shanghai with better prospects for careers and wealth hold strong appeal for professionals, which will translate into resilient demand for quality housing." said Chu. The resurgence of high-end homes in first tier cities came as the central and local government gradually loosened their grip over the property market last year. "The sustained slump in the property market last year rendered the government's previous purchase restrictions and home price limits unsustainable," said Guo Yi, Yahao's marketing director. Governments in second and third-tier Chinese cities began easing curbs in the second quarter last year as developers were increasingly strained by rising inventories and tightening liquidity. Though home supply rose ahead of March and there is growing expectation of more easing measures, including cuts in interest rates and banks' reserve requirement ratio, most analysts strike a note of caution over this year's housing market. Though the mortgage rate will most likely fall in the coming months and help contain the housing market's downward trend, home prices and the sale volume will be similar to those in 2014, according to Goldman Sachs. Destocking will remain a keynote for Chinese developers during the first half of 2015, with no marked pickup in demand, added consultancy CRIC. "You can tell from their whole-year sale targets that most developers are still being prudent. Home prices will likely remain flat in March as developers are more concerned with selling homes than raising prices," said Centaline's chief analyst Zhang Dawei. from http://www.ecns.cn/business/2015/02-27/155978.shtml