Pre-built homes prices fall 10% in Beijing

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Prices for homes purchased "off plan" have fallen 10 percent in Beijing since authorities unveiled policies to control the property market, according to an industry insider.

Homelink, one of China's largest real estate agencies, has released statistics that show the average cost of buying an apartment before construction is now 22,512 yuan per square meter, down from 24,954 yuan in March when the cooling measures came into force.

The reason for the decline is largely due to introduction of more low-price projects in the capital's suburbs last month, said the company's chief analyst, Zhang Yue. "There are very few new projects within the Fourth Ring Road, while most of those now being promoted are outside the Fifth Ring Road," she said.

More property developers have also delayed sale schedules in the hope of attracting higher prices once the market recovers. According to data from Yahao Real Estate Agency, only 10 of the 34 projects that had planned to start selling in April actually put properties on the market.

Figures from B.A. Consulting and 5i5j, a real estate service group, also show just 6,500 new homes were sold in April, a drop of 46.7 percent month-on-month.

The shrinking prices and trade volume have cooled many investors' interests.

"The real estate market in large cities, such as Beijing and Shanghai, has been developed for a decade. The land purchase costs more, and housing sale price makes smaller profit," said Chen Jun, vice-chairman of the Zhengjia Chamber of Commerce in Beijing. "The situation is much better in second- and third-tier cities."

Despite the slump in "off-plan" purchases, the market for secondhand homes has held strong. Homelink statistics show the average price is now 19,811 yuan per square meter, just 0.2 percent less than in March.

"Most owners and buyers are sticking to wait and see, which means the seesawing of secondhand homes prices will last for at least a couple of months," said Zhang.

Long Wen, a resident of Dongcheng district, said he and his fiancee spends almost every weekend looking for a two-bedroom apartment. "I feel so disappointed, as it's really hard to find an apartment that meets our demands and our budget," he told METRO.

The price control measures released in March, part of nationwide efforts to cool the overheating property market, will see the market stay "stable but with a slight decline", said city mayor Guo Jinlong.

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