The latest data points to a drop in China’s housing inventories which analysts expect to continue for at least another year on the back of the current de-stockign cycle.
Data from China’s National Bureau of Statistics indicates that as of the end of July China’s nationwide commercial housing area available for sale was 634.96 million square metres, for a decline of 10.81 million square metres compared to the end of June, equal to 9% of the commercial housing sales area for the month.
NBS data further indicates that the residential housing area available for sale fell by 9.88 million square metres during the same timeframe.
Wang Mengwen, a researcher with Shanghai E-House Real Estate Research Institute, said to Securities Daily that China’s housing inventory has fallen to a 33-month low, with the de-stocking cycle dragging it back to 2012 levels.
According to Wang the new low in housing inventories is in large part due to recent de-stocking in third and fourth-tier cities, and that the current cycle is set to continue for another 12.3 months.
“Since the first quarter of this year average price growth in commercial housing has basically stayed at 4 – 5%, which is far lower than increases seen last year,” said Wang.
“From this it can be seen on the one hand that as a result of the latest round of adjustments and controls new home pricing is restricted in hot spot cities, while a recent rise in the transaction ratio for third and fourth-tier cities has dragged the average price of commercial housing lower.
“Looking at the full year, [we] expect the average transaction price increase to remain under 5%.”
Yan Yuejin, chief research of the Shanghai E-House think tank centre, said that the data on housing area available for sale shows an ongoing downward trend, which clearly points to a alleviation in pressure on housing starts as a result of higher inventories, and that some cities may soon make a rapid return to the replenishing of inventories.