Property Purchase Restriction Policies Due in Some Cities

China introduced several restrictions this year in a bid to cool off rising property prices. However, some of the so-called toughest property purchase restrictions adopted by local governments are due to expire tomorrow. As our reporter Wang Ling finds out, the restrictions have failed to meet their expectations in the past few months and some of them will be extended into next year.

Beijing was the first city to roll out its plan to crack down on speculation in property market. One of the new regulations allowed only one additional property purchase per household in the city.

It was soon followed by more local governments, including Xiamen, Haikou, Wenzhou and Fuzhou, where restrictions will due at the last day of this year.

However, property market does not seem to have been affected. A real estate agent from Fuzhou says the property project she is selling is doing quite good.

"Construction will be completed in June, 2012 and most of them have been sold, even though it was only on market since November. The sales will be wrapped up soon after these few properties are sold."

In fact, home sales rebounded in first tier cites in November after growth rate slowed down in October.

Property analyst Zhang Dawei from real-state agency Centaline says the restriction measures only take back demand from purchasers, but supply did not increase. Many developers simply held completed projects in hand.

"It's mainly because the supply failed to keep up. The controlling measures are setting limitations on financing and trading. It's only for the symptoms, not to cure the disease. The real remedy is to increase supply."

But Zhang says it's not fair to say these tightening measures were a mistake.

"We can not rely on the measures to bring much impact to the market. It does help to drive away some speculators, and it earns time for other controlling measures."

Zhang also adds the restrictions can not be relaxed.

"It is more dreadful to give this psychological implication, investors will think tightening on property now comes to a stop. And they may think the controlling in 2011 is much relaxed than the 2010."

Property analyst Li Yige holds a similar opinion, saying property market may rebound if the restrictions are called off.

"If those cities that have adopted policies to restrict purchase now call off the policies, it is quite likely to see house prices to rebound again. Because the demand are now temporarily held and they will still come into the property sector."

So far, Fuzhou is the only city that has not made clear what it is going to do with the policies. Xiamen, Haikou and Wenzhou have all announced to prolong their policies to next year.

For CRI, I'm Wang Ling.