March 14 (Bloomberg) -- Shenzhen said it’s taking steps to guide developers in setting “reasonable” prices, responding to a report by news portal Sina.com that the southern Chinese city ordered a cap on values.
While the city hasn’t introduced a new policy, it has continued implementing the central government’s measures to ensure prices don’t rise too quickly, the Urban Planning Land and Resources Commission of Shenzhen Municipality said in a statement late yesterday. The authority has strengthened oversight of pre-sale approvals and will set the year’s home-value target as soon as possible, it said.
Local governments must respond to new policies issued by the central government on March 1, including home-price control targets, by the end of the month. Policy makers ordered the central bank to raise down-payment requirements and interest rates for second mortgages in cities with excessive price gains, enforced the payment of a 20 percent tax on property sales, and told cities to tighten home-purchase limits as part of the latest curbs.
“All the so-called new policies in fact is just enforcing the original practices on the implementation level,” Alan Jin, a Hong Kong-based property analyst at Mizuho Securities Asia Ltd., said in a phone interview today. “Local governments wouldn’t have the initiatives to take the lead on property curbs, but just to follow the central government’s orders.”
Cities overseeing pre-sale approvals “is a desperate measure to manually restrain price growth,” Jin said.
Home prices in Shenzhen rose 2.6 percent last month from January, the biggest gain among China’s 10 major cities, according to SouFun Holdings Ltd., the country’s largest real estate website owner, which monitors 100 cities.
A gauge tracking property shares on the Shanghai Composite Index was little changed at the close of trading, after declining 2.5 percent to the lowest in three months yesterday. China Vanke Co., the country’s biggest developer, fell 1.4 percent to 10.80 yuan in Shenzhen trading.
Developers in the southern China business hub bordering Hong Kong have been ordered to have “zero price increase” for new homes, news portal Sina.com reported yesterday, citing unidentified officials at local developers.
The reported “price cap” is not new and has been in place since 2011, wrote Deutsche Bank AG analysts Tony Tsang and Jason Ching in a note yesterday after checking with the city’s housing authority.
The cap in Shenzhen requires the month-on-month growth in the average transacted prices of all new homes to be zero, the analysts said.
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