Hainan property market booms

One of the top concerns for Chinese consumers is housing market that is rapidly rising beyond the reach of the ordinary buyer. Last month saw prices of homes in 70 major cities rise close to eleven percent from the same period in 2009. Haikou and Sanya, two cities in Hainan Province, topped the list of five cities which have seen the sharpest spikes. Analysts say it's the rosy future of the island that's given a shot in the arm to the local property market.

In January the State Council approved a plan to turn Hainan Island into one of the world's top tourist resorts. It sent the island's property market soaring.

Zhang Zanfeng, Vice GM of Sanya Rui Heng Property Consulting, said, "The effect of the policy exceeded my expectations."

Data shows property prices in the cities of Haikou and Sanya increased 58 percent and 56 percent respectively in February over the same period of last year. However, the number of sales fell from the previous month.

For example, Phoenix Island, a property project in Hainan, sold all its first units in January at 65 thousand yuan per square meter. In February, the price rose to over 80 thousand yuan per square meter, however, and only 300 units sold.

Wei Chegnzu, Vice GM of Sanya Phoenix Island Real Estate, said, "The second group of units started to sell on February the 10th and we sold about two thirds of them. "

Sales at another project have also declined.

"We sold 236 units in December and 243 units in January. But the only 54 units in February." Zhang said.

Analysts say the fall in sales was partially due to the rapid price rises. In Sanya, the price of one project was 19 thousand yuan per square meter in December and it has since risen to 28 thousand yuan per square meter.

Property salesperson of Hainan Province said, "The sales volume did decrease. It was because many customers returned home."

Zhang Li, Director of Sanya Statistics Bureau, said, "The volume in February is a bit lower than January. And the growth rate of investment in property slowed in February. "

Analysts say property prices in Hainan are already overvalued.