New property policies make immediate impact
The home-buying frenzy has been effectively tempered in Shanghai and Shenzhen following the release of cooling measures on March 25, including stricter home buying requirements and the tightening of credit lines, according to industry experts.
Weekly trade volume of new homes in Shanghai was halved from 785,500 square meters in the last week of March to 392,800 sq m the previous week, according to Centaline Property Agency. Similarly, in the secondary market, the volume dropped from 536,900 sq m to 287,700 sq m within the same period.
Chen Lina, analyst from Shanghai Sinyi Realty Agency and Consulting Co, added that the daily trade volume of used homes fell from 2,008 units to 1,290 in the wake of the new property measures. Furthermore, there was a 40.33 percent drop in the number of people looking for homes and daily visits to properties also fell 36 percent.
In Shenzhen, 652 new homes were sold in the week starting Mar 28, down 29.67 percent weekon-week, and the average trading price also softened to 49,621 yuan ($7,670) per square meter, dropping 4.17 percent, based on data by SouFun Holdings Ltd.
Though Beijing is the only firsttier city that has yet to announce new property measures, the transaction volume of the capital’s firsthand homes declined from 202,500 sq m to 187,500 sq m in the week starting Mar 28. However, more homes changed hands in the secondary market, with 762,700 sq m traded in the same week, compared to 737,900 sq m the previous week.
Zhang Dawei, chief analyst at Centaline Property Agency Limited in Beijing, said that the existing measures have been effective at taming the property market.
“While price growth in Beijing’s residential market has also been strong, the capital already has relatively strict requirements for non-locals looking to buy homes. There could also be further restrictions on loan amounts to second-home purchasers,” said James Macdonald, head of research for Savills in China. “The residential markets in firsttier cities need to be closely monitored and existing regulations need to be properly enforced. The sooner a comprehensive property registration and tax policy are in place, the better results we will expect. Also, the government should look at supply side factors to ease the pressure on existing housing stock,” said Macdonald.
Property analysts said first quarter data shows that the residential markets in major second-tier cities are set to take over the heat from their first-tier counterparts.
“Transactions in hot secondtier cities have more than doubled compared to the same period last year, with 4.1 million sq m of new commercial housing being traded in Hangzhou of Zhejiang province, a 136 percent year-on-year growth. Over in Suzhou and Nanjing of Jiangsu province, transactions were up 129 percent to 3.3 million sq m, and 122 percent to 4 million sq m respectively,” said Ding Zuyu, executive president of E-House (China) Holdings Ltd.
Due to the purchasing limits in first-tier cities, home tradings in the neighboring cities of Wuxi in Jiangsu province, as well as Dongguan and Foshan in Guangdong province rose quickly. Furthermore, home sales in some cities such as Tianjin, Jinan of Shandong province, Ningbo of Zhejiang province, Shenyang of Liaoning province and Changzhou of Jiangsu province, that were formerly haunted by high stocks have started to pick up.
The comparatively loose measures in key second-tier cities that are located in key economic areas will catch market attention, said Chen Zhongwei, head of research with CBRE Greater China. He added that home prices and trade volumes in these cities will be on the rise in the coming six months.
While China’s economic growth is slowing from double digits to between 6 and 7 percent, it is natural for home prices to slow down to match the economic index, added Chen, who believes that the majority of lower-tier cities will continue to suffer from oversupply.
The sooner a comprehensive property registration and tax policy are in place, the better results we will expect. Also, the government should look at supply side factors to ease the pressure on existing housing stock.” head of research for Savills in China