Housing Prices Continues to Languish in China’s First-tier Cities

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Housing prices as well as transaction volumes continued to falter in first-tier cities across China in August.

A new report from Anjuke Real Estate Research (安居客房产研究院) indicates that Beijing, Guangzhou and Shenzhen all posted month-on-month declines in new housing prices of varying degrees for August, with Beijing seeing a 13% drop compared to the preceding month.

Data released by China’s National Bureau of Statistics further indicates that Beijing’s second-hand home market posted price declines for three consecutive  months from May to July, although Anjuke’s research points to a slight rebound in August.

According to Anjuke second-hand home prices in Guangzhou, Shanghai and Shenzhen in August remained level with those for July.

Anjuke analysts imputes the weak performance of housing prices to ailing transaction levels in China’s major cities.

“Supply in first-tier cities lacks vigour…buyers are not that enthusiastic about entering the market,”  said the Anjuke report.

Zhang Dawei, Centaline chief analyst, said that seasonal factors and policies directed at curbing speculative property investment had a heavy adverse impact upon the performance of Chinese housing markets in August.

“July and August are traditionally slow seasons for the housing market, while the impact of housing market control policies continues to increase, and first-tier cities such as Beijing are seeing declines in both transaction volumes and prices,” said Zhang.

Data from Centaline indicates that in August Beijing’s second-hand home transactions remained below 10,000 for the third consecutive month, while a total of 1,786 contracts for new homes were executed, for a drop of 56% compared to the figure of 4,052 during the same period last year.

A report from Shanghai E-house Real Estate Research Institute further indicates that the new home transaction floor area for Shanghai in August was 460,000 square metres, for a month-on-month decline of 31.2%, while the area for second-hand homes was 8.66 million square metres, for a year-on-year drop of 64%.

“At present, buyers continue to face considerable pressure in terms of loans and various hidden costs,” said Shanghai E-house chief researcher Yan Yuejin to China News Service. 

According to Yan banks in many cities are raising the down payment rate, which is having an even greater impact upon their willingness to buy than interest rate hikes.

Prospective homebuyers in many first-tier cities are also required to pay extra transaction fees, further impacting demand in these hot-spot housing markets.

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