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 Luxury property sales took a hit last year as China's
anti-corruption campaign discouraged conspicuous consumption, but
buyers are now taking advantage of easier credit and a stock market
rally to upgrade their homes.
Some developers are starting to raise prices in major cities,
following the central bank's surprise November rate cut and its
decision this month to lower the amounts lenders must hold as
reserves as Beijing tries to revitalize an economy growing at its
slowest rate in more than two decades.
The high-end trend is unlikely to spill over into the broader market
just yet, however, due to a glut of unsold homes.
"It's not going to lead to a full recovery in the market," said
Clement Luk, Shanghai-based chief executive officer for eastern
China at property agency Centaline.
"Liquidity is more loose compared with a year ago, but the market
doesn't have the environment for a big price hike because there's
still a lot of inventory and there's no apparent improvement in the
macro economy."
China Resources Land, Franshion Properties and China Merchants
Property are all planning to hike prices for some of their new
projects in prime areas this year, according to company officials
who asked not to be named as they were not authorized to speak to
the media.
HOME UPGRADING
"The luxury market is improving from earlier last year as some
investors have taken profit from the bullish stock market and are
investing in real estate," said Angeline Wu, vice manager of SRE
Finance Centre, a real estate company based in Shanghai.
"Market liquidity has also got better. But the luxury apartment
transactions we're talking about now are not the extravagant ones;
they're the home-upgrading types priced at around 50,000 to 100,000
yuan per square meter."
Chen Long, customer manager at Rapido Real Estate in Shanghai, told
Reuters that prices of luxury units it sells in the commercial
capital had risen steadily over the past two years and were now
fetching about 50,000 yuan ($8,000) per sq m.
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China's new home prices may have bottomed and even started to
rebound in January after eight months of decline, industry surveys
showed, fuelling hopes that official data due on Tuesday will
confirm a recovery in the massive property market.
The volume of sales of luxury apartments in Shanghai worth more than
10 million yuan ($1.6 million) fell 34 percent last year to 2,246
units, from 3,406 units in 2013, according to real estate research
company CRIC. Some 2,243 luxury units were sold in 2012.
"The percentage of luxury new projects launched will be higher in
the first-tier cities going forward," said CRIC analyst Yang Kewei.
"Otherwise developers wouldn't be able to survive because land
prices in these cities are too high."
China Vanke, China's largest residential developer, raised prices of
the last batch of apartments at a Shanghai project by 5.8 percent
this year to 71,720 yuan per sq m, CRIC's data showed. A sales agent
at the Vanke project confirmed to Reuters that the company had
raised prices but she did not provide details.
"We are not the only project lifting prices," she said.
(Reporting by Clare Jim; Additional reporting by Sue-Lin Wong and
Shanghai Newsroom; Editing by Anne Marie Roantree and Alex
Richardson)
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