(HK Edition)
Updated: 2007-08-03 15:25

DONGGUAN: Property price in Dongguan, home to many Hong Kong firms, surged 33.8 percent in the first half of the year, prompting the local government to intensify efforts to tame the market.

Residential properties in the South China city, known for its manufacturing industry, were sold at an average of 4,692 yuan per square meters from January to June, compared to 3,506 yuan during the same period last year, the city's housing administration bureau said on Wednesday.

July witnessed an exceptionally high growth in housing price, which stood at 6,864 yuan, up 20 percent from June.

A total of 9.27 billion yuan was recorded in house sales from January to June, reflecting a yearly increase of 72 percent.

The investment in property market amounted to 7.9 billion yuan in the first half, surging 26.3 percent year-on-year.

Speculative purchases of medium-to-high-end houses were attributed to the skyrocketing prices, a market player said.

"Upscale market contributed a lot to the boom," Che Derui, a manager with Centaline Property Consultants, was quoted by Nanfang Daily News as saying.

Investors rushed to buy luxury and high-end units, "betting on their investment potential".

"The market is driven by speculation instead of real demand," Che said.

Meanwhile, local government has vowed to "reasonably control the property prices" by strengthening the supervision of developers.

Overheating Guangdong

Skyrocketing property price in Dongguan, especially in July, showed the housing market in the Pearl River Delta (PRD), used to be reasonable compared with Shanghai, was overheating, said a scholar.

"It reflects that sharp property price rises in big cities such as Guangzhou and Shenzhen have started spreading in the PRD region," said Fan Ying, a business professor at China Foreign Affairs University.

The average property price in Guangdong Province advanced 18.1 percent to 5,887 yuan per square meters in the first half, eclipsing the GDP growth of 14.3 percent, provincial government data showed.

"It would be reasonable if the housing price rise is on par with, or slightly higher than the GDP growth," Fan said.

With smaller cities also booking sharp rises, the PRD market has witnessed a huge boom in general, she said.

Property price in Shenzhen grew by 42 percent in the first half to 13,178 yuan per square meters.

Guangzhou, another economic powerhouse in the province, saw the price increase 25.8 percent to 7,743 yuan.

The alarming growth forced local governments to resort to cooling-down measures.

Last month, Shenzhen government restricted people from Hong Kong and Macao from buying more than one residential unit in Shenzhen for personal use. Meanwhile, overseas people have bought about 8 percent of Shenzhen houses.

The local government also mulls levying 0.5 percent land tax on high-end home purchases.

Rosy prospect

There are optimists, however.

Citing PRD's economic growth and increasing local consumption, some analysts believed the property prices in Guangdong still have room to rise.

"People are betting on long-term prospects," said Michael Choi, chairman of property consultant Land Power International.

Guangdong's growth would well bolster its property market, but the growth rate would slow down in the second half amid cooling-down measures, he added.

Guangdong accounts for one-eighth of the mainland's GDP and one-third of its foreign trade.

An increasing number of rich middle class would also help boost demand for properties, said Yang Sizhong, a guest professor with Shenzhen University.

However, both of them called for more supply of units less than 90 square meters to meet the demand of low-income group instead of encouraging speculation on medium-to-high-end properties.