Pre-owned home sector shows signs of recovery
Sales in 25 major mainland cities rise by nearly 25% in first two months of 2024
The mainland’s pre-owned home market is showing signs of recovery, based on data for the first two months of 2024, amid continued efforts by authorities to ease purchase restrictions to arrest a prolonged nationwide property slump.
Sales of second-hand homes in 25 major cities across the country jumped by nearly 25 per cent in January and February compared with the same period in 2022, according to data published in March by the China Index Academy, a property research firm.
While sales declined by 13.1 per cent compared to 2023, partly due to a high base because pent-up demand caused sales to soar after Beijing scrapped its Covid lockdown rules in late 2022, they nonetheless could herald a more significant recovery later this year, according to analysts.
“Sales went down, but there is still a good amount of activity in the pre-owned home market, as is reflected in the increased number of listings,” said Yan Yuejin, director of the Shanghaibased E-house China Research and Development Institute.
“This gives buyers more options. An increase in supply also drives down prices, and as sellers begin to take bigger cuts on prices, the value for money of pre-owned homes will become more obvious.”
The number of listings in 14 major cities rose by 56.9 per cent year on year in February, marking the 18th consecutive monthly increase, official data shows.
Activity in the pre-owned home segment is showing good momentum in top-tier cities such as Beijing, where the number of listings grew by 8 per cent month on month to 146,435 as of the end of March, according to data from Ke Holdings, a housing transaction platform.
In Shenzhen, contracted sales jumped by 116.6 per cent month on month to 5,196 in March, according to the local real estate association.
Lindsay Zhang, a Beijing resident who works in finance, has had her eye on a second-hand flat in a good location selling for 100,000 yuan (HK$108,203) per square metre, which fits her budget. But she is in no hurry.
“The stimulus measures did not seem to have a significant impact on demand in Beijing, and prices will probably drop further,” she said. “I might wait until September or October to make a move, or at least when prices have dropped by 15 to 20 per cent of the original level.”
As of the first quarter of 2024, local governments across the mainland have rolled out more than 100 measures to ease home purchase restrictions, as tallied by the China Index Academy.
For example, on March 27, Beijing scrapped a rule that restricted divorcees from buying new properties within three years of the divorce. The restriction was originally introduced in 2021 to curb speculative behaviour.
Hangzhou, the capital of Zhejiang province, scrapped all eligibility criteria around preowned home purchases in March
Activity in the pre-owned home segment is showing good momentum in cities like Beijing, where listings have increased.
in its latest effort to boost demand. The city saw contracted sales in March jump by 236 per cent month on month to 8,557.
In February, the People’s Bank of China (PBOC) unveiled a 25basis-point cut in its five-year loan prime rate, a key mortgage benchmark, to encourage home purchases.
PBOC governor Pan Gongsheng said last month some “positive signals” were beginning to show.
“If you look across the country, you’ll see that purchase restrictions still remain [in place] here and there in the pre-owned home market, especially in larger cities,” E-house’s Yan said.
“These curbs can be removed entirely, just like in Hangzhou. Relaxing rules in the pre-owned home market can generate demand for upgrades, as people can sell their old houses to buy new ones, thereby revitalising the whole market.”
In the new home market, sales fell for a 10th consecutive month in March, dropping by 46 per cent year on year to 358.3 billion yuan among the nation’s 100 biggest developers, according to data published by China Real Estate Information Corp.