Real Estate Stocks Take Beating as China Tightens Controls on Housing Sales in Lower-Tier Cities
Liao Shumin
/SOURCE : Yicai
Real Estate Stocks Take Beating as China Tightens Controls on Housing Sales in Lower-Tier Cities

(Yicai Global) Sept. 25 -- The real estate segment of China's stock markets experienced a sharp correction today after eight major cities in China rolled out further property market tightening measures last weekend.

The second-tier cities of Xi'an, Chongqing, Nanchang, Nanning, Changsha, Guiyang, Shijiazhuang and Wuhan have imposed property sale restrictions, with most banned home sales within two to three years of purchase. Homebuyers in Shijiazhuang will have to wait five years before they can resell their properties.

In early trading today, the market value of 126 real estate companies listed in China's stock markets shrank CNY 229.2 billion (USD34.6 billion), compared with last Friday.

The real estate stocks listed in the Hong Kong stock market were hit even worse, in sharp contrast to their skyrocketing gains, sometimes tripling their value, so far, this year. 

By 14.00 p.m., Kaisa Group Holdings Limited [HKG:1638] plunged 12 percent, slightly recovering from 16.57 percent drop in the morning session. China Evergrande Group [HKG:3333] dipped 9.50 percent, while Country Garden Holdings Co.[HKG:2007] slumped 9.7 percent. Sunac China Holdings Ltd. [HKG:1918] shed 7.30 percent and China Vanke Co.[HKG:2202] fell 6.86 percent.

The new round of tightening controls on housing sales started by the eight cities show that there will be no respite in the market in the long-term and the authorities will not change their determination in controlling housing prices, Yang Xianling, head of research at real estate agency, Homelink, told state-run Xinhua News Agency.

The measures taken ahead of the week-long National Day holiday, the traditional peak season of sales, are aimed at channeling market expectations in the right direction, Yang added.

The tightening of controls on housing market is moving down to the second- and third-tier cities and more are expected to follow suit, Xinhua quoted Zhang Dawei, chief analyst at Centaline Property, as saying.

Follow Yicai Global on
Keywords: Property Tightening Measures , Real Estate Stocks