Rule changes may drive demand for villas
A change in rules restricting pre-sale of luxury housing in China is likely to drive more high-end transactions in 2014, especially as China’s wealthy individuals confront policies that limit the quantity of homes they can purchase.
As part of a barrage of moves aimed at reining in runaway home prices late last year, both Beijing and Shanghai prohibited pre-sales of luxury housing. The moves came after the cities apparently came under pressure from the central government to slow down double-digit growth in home prices during September and October.
However, in January, both cities removed their bans on pre-sale of high-end homes as the government has begun to rely more heavily on financial controls to cool the housing market.
In a report in the South China Morning Post, Gao Shan, vice-general manager of Yahao Real Estate Selling & Consulting Solution Agency indicated that government restrictions had built-up demand for villas and other luxury homes that will drive up transaction volume in 2014.
Many of China’s policies designed to cool the housing market centre on discouraging the purchase of multiple homes. Rules which specify greater down payment percentages for second homes, and bank policies that dictate higher mortgage rates for second homes discourage wealthy individuals from purchasing additional units.
These policies may effectively force wealthy individuals, who are limited in their investment options in China, to head towards the higher-end home market.
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