Property average recorded sales in Beijing tumbled abruptly over the long May Day holiday, with the daily sales of second-hand property dropping by more than 80 percent compared with the last month, according to an official real estate website.
Analysts say the abrupt cooling down of the property market in Beijing is a result of a raft of tough measures issued by the central and local governments recently to curb run-away prices. The moves include the recent limiting of homebuyers to one new apartment, but analysts also warned that the measures could deflate the property bubble in the long run, depending on their implementation.
The latest figures from the Beijing Real Estate Management Network show that the daily sales of second-hand property in Beijing dropped to 211 over the weekend, against average daily sales of 1,164 last month - an 82 percent decline.
Statistics from the website also showed on Monday that, since mid-April, among 2,377 new apartments released for sale, only one has been sold outright.
LüLihua, an agent with 5i5j.com, a leading realty agency, told the Global Times that this May Day holiday weekend marked the most sluggish per-formance of property sales by his company in recent years, with fewer calls and visits by potential homebuyers.
"The rent-to-sales ratio has significantly gone up recently, which means more people have decided to rent properties instead of investing to buy apartments," he said, adding that many developers have postponed selling new apartments or constructing new buildings.
Three real estate companies attached to two State-owned enterprises, Citic and Sino-Ocean, which set new land-buying price records last month, have suspended construction projects in the suburbs of Beijing, fearing that significant drops in sales prices could cost them serious money, the China Times reported on Monday.
It was unclear when they would resume construction.
"The significant drop in housing sales is inevitable, as both consumers and developers are taking a look-and-see attitude after a series of regulations since last December aimed at cooling down the red-hot real estate market," said Yin Bocheng, former director of the Real Estate Research Center at Fudan University.
"The drop is expected to continue over the next few months. The market performance depends on whether housing prices will stay at a level accept-able to consumers and developers," Yin said.
On Sunday, the second day of the May Day holiday, Beijing housing authorities announced detailed rules on implementing what was called "the toughest ever property policy" in China, which took effect Saturday, limiting families to one new property purchase.
The rules place the restrictions on each "home-buying family," which includes the homebuyer, his or her spouse and underaged children, limiting the family to one new-home purchase, including second-hand property, in the city.
The rules mark the latest in a series of measures by the central and local authorities to rein in rampant property speculation and rocketing prices.
Prices in 77 cities across the country surged 11.7 percent in March, according to the latest figures released by the National Bureau of Statistics of China.
In Beijing, the average price of a new property was 21,880 yuan ($3,205) in the first quarter of the year, up 88.4 percent over last year's level, which was 11,615 yuan, according to Centaline Property, a property agency in Beijing.
On April 15, the central government decided to raise the down payment for a family purchasing a second apartment, from 40 percent to 50 percent.
Also, higher loan rates and down payments are required for third homes and beyond. The housing authorities in the capital have also decided to suspend mortgage loans on third homes and beyond.
However, analysts and homebuyers also warned that the rules may only help curb the prices in a short run and contain loopholes that could be exploited by speculators.
Hui Jianqiang, a senior analyst with the E-House R&D Institute, told the Global Times on Monday that although Beijing's latest measures are branded as the harshest in history, it is still hard to say whether it could effectively cool down the market in the long run.
"The latest measures are meant to crack down on speculation, but I don't think it could effectively reduce the possibility of a large amount of capital flowing into the real estate market in the capital city," he said.
And it appeared to overlook the needs of those families that have more children, he said, adding that the announcement of new measures in the future should better ensure the needs of disadvantaged groups.
Yan Bokai, a consultant with 5A Home Loan Services, a home loan agency, said that speculators can always work out ways to circumvent punishment, legally, by filing for divorce or postponing marriage.
"There is no nationwide database on property sales. So it is impossible for regulators to check whether the mortgage applicants own apartments in other cities," he said.
Professor Yin said the most significant task facing the government is to strictly implement existing regulations instead of hastily announcing new ones.
Liu Xidan, an office worker in Beijing who has postponed buying a new home, told the Global Times that she is not optimistic about the effective-ness of the new policy to rein in property speculation.
"Property agencies and banks always work together to forge documents. Without a proper supervision system, forgery and speculation may continue to flourish," she said.