Beijing’s housing market continues to reel as a result of a record-volume of property control policies launched by the municipal government.
The latest data from Centaline Property indicate that Beijing new home transactions in October were only 20,550, for a 50.6% drop compared to the same period last year, as well as the lowest level in the near-ten year period since compilation of online data commenced.
Centaline chief analyst Zhang Dawei said to Securities Daily that over the past year Beijing had issued a record number of real estate control policies, launching over 30 measures in under twelve months.
The market had gradually adjusted after more than six months of concerted control measures by entering a trough of activity, with expectations of more sluggish performance ahead.
Market observers note that restrictions on high-end projects entering the market and a temporary slowdown in the issuance of pre-sale permits are key drivers behind the drop in new home transactions in Beijing this year.
These factors are likely to relent soon, however, with data from property consultancy Yahao indicating that a total of 11 commercial residential projects are set to hit the market in November.
According to Yahao market analyst Guo Yi, two of these projects would be price restricted developments, that land for which was provided under the condition that any commercial residential projects have an average price of under 38,994 yuan per square metre, and a maximum price of 40,944 yuan per square metre.
Guo sees price-controlled projects dominating future real estate developments in Beijing, with all 34 of the land plots transferred for commercial residential apartments this year subject to price restrictions.
“Price restricted housing will become the new hallmark of Beijing’s housing market for a definite period in future, and thus have the effect of dragging down the price structure of completed transactions on the overall market.
In addition to price restricted housing, Beijing has also taken the lead this year in the launch of sales restrictions, that prohibit the re-sale of properties for up to five years from the date that title or tax certificates are obtained.
According to analysts one of the goals of the sales restrictions is to prevent speculative investment in price restricted housing, which could have the effect reducing effective housing supply on the pre-owned market.