Real estate hike.

Kunming's steady secondary property market has suddenly seen rapid growth this year, with turnover increasing by 150%. The secondary market now overwhelmingly dominates the real estate sector in the city.

Some 21,000 second-hand properties, with a total area of 2.5 million sqm, exchanged hands in Kunming between January and June this year, with total turnover amounting to Rmb3.5 billion (HK$3.3 billion), up 20% year-on-year.

About 4,800 units are classified as public housing, up 83% year-on-year in numbers on the market and involving a total floor area of 340,000 sqm. Overall in this subsector, there has been an increase of available space up 113%, with gross turnover of Rmb600 million (HK$566 million) up 150% over the January to June period.

There are many reasons for the huge growth in real estate transactions. Apart from rapid economic growth and greater purchasing power, the city owes its secondary market property boom to the efforts made by the Yunnan provincial government and Kunming city government to expedite the drafting and implementation of liberalization measures.

The introduction of regulations for purchasing public housing and housing reform scheme units, more freely-given provident fund housing loans and lower taxes and fees on deeds and transactions have each helped to free up the sector, as has the waiver of market access approval and consent required from original owners.

Property prices have also been traditionally quite high in downtown Kunming and these are going up fast as demand increases.

Many salaried city workers, even with limited incomes, are also turning their eyes to secondary housing in areas with lower property prices.

Moreover, secondary properties, with their economic sizes and prices, as well as better facilities and locations, are more affordable than homes in the suburbs.

Inevitably, Kunming's fast growing secondary market is making a lot of property agents very happy. At present, agents charge both buyers and sellers between 1% and 3% of the transaction price, as commission. Normally a 3% commission is charged on a two-bedroom flat, for example.

There are about 1,000 real estate agents in Kunming, but only 30% are registered and have legal status, while the remaining 70% have only opened for business this year. The demand for professional agencies and instructors is already definitely appearing.

from Kingway Huang, Kunming Office