Still "too high"

A report released by the PBOC last week on the basis of a survey in 50 cities nationwide showed that more than 60 percent of consumers considered current home prices "too high".

"Although there are fresh signs of life in recent months in the market, with the overall economy having not fully recovered, it is difficult for high trading volume to continue into the second half of this year along with rising prices," Qin said.

Qin added that only if investors and second-time buyers became the driving force of the property market, could it be said that the residential property market was truly on the way back up with real momentum.

But figures from 5i5j showed that the first-time home buyers were still the primary home purchase group, accounting for 37.21 percent of the total second-hand home buyers in Beijing in the eight months through May.

Investors accounted for 13.88 percent and those who were trading up accounted for 34.42 percent of the total. The remaining 14.49 percent were those who bought second-hand homes for their elderly parents or so that their children could live closer to school.

If many first-time buyers rushed into the market within a few months, while investors and second-time buyers avoided the market as prices rose and potential investment gains shrank, any boom would be short-lived, Qin added.

Yet, it seems that developers are more optimistic about the prospects of a booming property market in coming years. They've begun to vie for good downtown sites in mid-sized or large cities.

China Vanke, the largest domestic developer by market value, has spent more than 4 billion yuan in the past six weeks to get eight parcels of land in several cities including eastern Qingdao and Wuxi, northeastern Shenyang and others.

Latest figures from the CIA showed that in the week of June 8 to 14, 122 parcels of land with a combined space of 8.1 million square meters were offered for sale to developers in 20 key cities including Beijing, Guangzhou and others. The total area was 33 percent higher than a week earlier and the average selling price was 56 percent above the opening bid, the CIA said, without giving further details.

"As developers sold a backlog of homes after the Spring Festival, their financial situations have improved. The reduced new capital threshold has also increased their willingness to invest more," Chen said.

Surging land prices had not only shored up the prices of unsold homes and nearby second-hand homes, but also increased the concerns of potential buyers like Sun. It doesn't take long for any positive developments, even those involving homes that won't go on sale for years, to affect existing residences.

After Guangzhou-based R&F Properties bought a site within the eastern Third Ring Road of Beijing on May 21 for 1.022 billion yuan, 242 percent above the opening bid, second-hand home prices rose 6.5 percent to 16,500 yuan per sq m in less than 10 days at one nearby community, CIA figures showed.

Areas within the Fifth Ring Road are considered the central city.

The price of a hotly discussed new project named "Times" outside the eastern Fourth Ring Road surged by 5,200 yuan per sq m to about 21,000 yuan at the end of May in less a week.

When contacted by Xinhua Wednesday, a saleswoman said there were only three flats left for the "Times" project.

The extra 5,200 yuan was equal to nearly two months' income for Sun and a one-bedroom apartment of 68 sq m in this project would cost her every cent of 40 years' current annual income.

"Some first-hand apartments are too expensive and those cheaper ones are too far away from subways, so we plan to buy a second-hand one within walking distance to subways. My fiance and I had to borrow money from our parents for the down payment. I hope housing prices will become more affordable," she said.

Chen said it was understandable that some developers would charge more to increase profits, but he said that the long-term goal for developers should be more realistic.

"Glimmers of light in the market and rising land prices in some cities do not mean that a full and sustained market recovery has taken shape. The stable development of the property market would be conducive to various stakeholders, including developers and home buyers," he added.

(Xinhua News Agency June 18, 2009)