State media last week signaled the end of price caps by announcing that the government had approved prices in a new luxury Shanghai condo complex for 160,000 yuan per square meter, or about $3.8 million for a two-bedroom unit, and in a Beijing complex for about 140,000 yuan per square meter. Beijing's cap had been 40,000 yuan per square meter.
Meanwhile, the Inner Mongolia city of Hohhot scrapped a rule that restricted individuals seeking to buy second homes as investments. The rule, like the price caps, was aimed at keeping prices affordable. And the city of Jinan, in Shandong Province, recently promised to adjust its rules in order to "foster a healthy property market."
Local governments also have been slashing lot prices in recent months, even though land sales are a major fiscal revenue source in China. A study of 300 cities by the China Real Estate Index System found land prices fell 15% in the second quarter from the same period 2013. Kim Eng said mid-sized cities have been especially busy cutting prices on lots that developers want for construction projects.
The policy moves have had a positive effect on consumer sentiment. A second-quarter People's Bank of China survey of urban householders found 14% of 20,000 bank customers in 50 cities said they planned to buy a home within three months.
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