12 hours after announcing the relaxation of limits on home-buying, Guangdong city changes its mind
Sandy Li 13 October 2011
Just hours after becoming the first mainland city to announce the relaxation of home buying limits, Foshan in Guangdong province has done an about-face, saying it needed more time to think about the matter.
Just before midday on Tuesday, Foshan said residents would be allowed to buy “another home” if it cost less than 7,500 yuan per square metre, but then reversed its decision just under 12 hours later.
Foshan Bureau of Housing and Urban-Rural Development said the new policy would be “temporarily suspended because it needs to seek public opinion and make a comprehensive assessment of the impact”.
Tuesday’s announcement also lifted a ban on non-local residents buying homes as long as they met local movement-of-talent criteria.
The new policy had been due to take effect yesterday.
Alan Jin, the head of regional property research, excluding Japan, at Mizuho Securities Asia, said he believed Foshan’s U-turn was prompted by “pressure from higher-level authorities, either the provincial government or Beijing”.
Beijing’s move to rein in home prices had had an effect, but the impact was reflected more in shrinking sales than in the fall in prices, he said.
Michael Yuk, general manager at Centaline Property’s Foshan branch said prolonged sluggishness in the sector was particularly hard on local governments in second and third-tier cities.
“For the past five to 10 years, land sale revenue has become a major source of local government income. Local authorities want to end these home purchase restrictions as soon as possible to revive the ailing property market,” Yuk said.
Yuk said the about-face showed that Foshan had not won official consent from Beijing.
“The move to relax the limits also sparked a heated debate whether other cities would follow Foshan’s example, which I don’t believe Foshan had expected, so it put the change on hold until further notice,” he said.
Property stocks shrugged off the development. Shares of Beijing Capital Land, which has developments in Foshan, rose 7.69 per cent to close at HK$1.54 yesterday, Country Garden Holdings was up 3.76 per cent to close at HK$2.48 and Poly Hong Kong Investment edged up 9.12 per cent to close at HK$2.99.
Since Foshan joined more than 40 other cities in banning residents from buying more than two homes, Centaline said total sales volume in the primary residential sector had fallen to 410,000 square metres between April and September, down 20 per cent from the same period last year.
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Foshan in fast U-turn over home restrictions
12 hours after announcing the relaxation of limits on home-buying, Guangdong city changes its mind
Sandy Li
13 October 2011
Just hours after becoming the first mainland city to announce the relaxation of home buying limits, Foshan in Guangdong province has done an about-face, saying it needed more time to think about the matter.
Just before midday on Tuesday, Foshan said residents would be allowed to buy “another home” if it cost less than 7,500 yuan per square metre, but then reversed its decision just under 12 hours later.
Foshan Bureau of Housing and Urban-Rural Development said the new policy would be “temporarily suspended because it needs to seek public opinion and make a comprehensive assessment of the impact”.
Tuesday’s announcement also lifted a ban on non-local residents buying homes as long as they met local movement-of-talent criteria.
The new policy had been due to take effect yesterday.
Alan Jin, the head of regional property research, excluding Japan, at Mizuho Securities Asia, said he believed Foshan’s U-turn was prompted by “pressure from higher-level authorities, either the provincial government or Beijing”.
Beijing’s move to rein in home prices had had an effect, but the impact was reflected more in shrinking sales than in the fall in prices, he said.
Michael Yuk, general manager at Centaline Property’s Foshan branch said prolonged sluggishness in the sector was particularly hard on local governments in second and third-tier cities.
“For the past five to 10 years, land sale revenue has become a major source of local government income. Local authorities want to end these home purchase restrictions as soon as possible to revive the ailing property market,” Yuk said.
Yuk said the about-face showed that Foshan had not won official consent from Beijing.
“The move to relax the limits also sparked a heated debate whether other cities would follow Foshan’s example, which I don’t believe Foshan had expected, so it put the change on hold until further notice,” he said.
Property stocks shrugged off the development. Shares of Beijing Capital Land, which has developments in Foshan, rose 7.69 per cent to close at HK$1.54 yesterday, Country Garden Holdings was up 3.76 per cent to close at HK$2.48 and Poly Hong Kong Investment edged up 9.12 per cent to close at HK$2.99.
Since Foshan joined more than 40 other cities in banning residents from buying more than two homes, Centaline said total sales volume in the primary residential sector had fallen to 410,000 square metres between April and September, down 20 per cent from the same period last year.
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