HONG KONG, July 9 Shanghai's city government
became the second in two months to allow more luxury properties
into the market, real estate agents and developers said,
signalling some cities in China are easing restrictive policies
that aimed to cool an overheated market.
City officials in Beijing had earlier approved seven
projects in June selling at prices above a cap set last
November, which made developers less interested in bidding for
expensive land in the city, media reported on Monday.
Any move to drive up home prices in China, which are already
near record levels, can be controversial. The central government
prefers that local authorities help curb property speculation
because it fears unaffordable housing could cause social unrest.
A project developed by Shenzhen Overseas Chinese Town Co Ltd
in central Shanghai recently gained selling approval
to set prices close to 300,000 yuan ($48,400) per square meter,
a record in the financial centre, according to online
"We have seen new projects setting prices above 100,000 yuan
in the past few months," said Thomas Lam, senior director at
realtor Knight Frank. "It's a signal that the government is not
implementing the administrative measures as strictly as it once
did. It knows there's still a demand for luxury housing."
Developers also said it is much easier to get pre-sale
approval and sell to buyers who are switching homes.
"We are allowed to raise prices...there's no formal
documents about it, but we're told verbally. We all know it's
been relaxed," said a developer who declined to be named because
of the sensitivity of the matter.
He said the company raised some development prices to match
increased market prices in the city.
Knight Frank's Lam said a curb on luxury properties would
discourage developers from buying land at prices at record
levels, especially in the centre of top-tier cities. Land sales
are the major revenue for most local governments in China.
Some local governments are also allowing people to buy more
than one home, which earlier had been prohibited. The northern
city of Hohhot in the Inner Mongolia region was the first city
to openly relax housing restrictions.
Some Chinese cities have also tried to limit property price
cuts to 15-20 percent from the original asking price, developers
and real estate agents said in May, in a bid to slow a steeper
industry downturn and boost confidence in the market.
More developments in China are offering discounts of more
than 20 percent, property research company CRIC said in a
report, and a development in the northeastern port city of
Dalian slashed prices by 39 percent last week.
($1 = 6.1970 Chinese yuan)
(Reporting by Clare Jim; Editing by Matt Driskill)