Housing transactions have fallen to a record low in the Chinese capital following the introduction of strict real estate market controls in March of this year.
Data from Centaline Property indicates that as of 24 December Beijing had seen a total of 26,253 new commercial home transactions since the start of 2017.
The full year total is expected to reach around 26,500 for a year-on-year decline of 45%, as well as the lowest transaction volume since the start of online records.
Data from the China Index Academy further indicates that the transaction value total for Beijing commercial housing in 2017 is expected to reach 276 billion yuan, for a near halving compared to the figure of almost 500 billion in 2016, and a drop of 21% compared to 2015.
According to Zhang Dawei, chief analyst for Centaline Property, the situation for pre-owned homes in Beijing is even more dire.
“In 2017 the Beijing pre-owned home transaction volume will be approximately 134,000, for a drop of 51% compared to the figure of 270,000 in 2016,” said Zhang to Securities Daily.
“This is the lowest transaction volume since 2015, and if we only look at transaction volumes after April (when the impact of new property market control policies commenced), then the figures are even lower compared to the same period in 2014 during the housing market trough
“For this reason we can forecast that in 2018 Beijing pre-owned home market transaction volumes will continue to languish.”
The pre-owned home transaction volume is nonetheless five times greater than the transaction volume of new homes, with sector analysts expecting this trend to exacerbate in 2018.
In tandem with the drop in transaction volumes Beijing housing prices have also faltered, with the latest figures from the National Bureau of Statistics indicating that new commercial housing prices fell 0.3% year-on-year in November, while prices for pre-owned homes fell 0.9%.
The chief reason for the slump in both transaction volumes and prices in Beijing is the slew of housing market control policies launched by the municipal government in March, which came into effect immediately and have had a huge impact on the sector.
The Beijing municipal government issued a total of 10 real estate control measures within the space of 18 days from March to April, including the requirement that non-Beijing residents pay local taxes for 60 consecutive months before qualifying for housing purchases, and restrictions on the use of commercial projects for residential purposes.
The slew of policies served to abruptly cool down a housing market that was still feverish in the first quarter of 2017.
“Beijing has issued nearly 50 control measures this year, at a rate which we can say is historically unprecedented,” said Zhang Dawei.
“In the next five years Beijing will build a total of 250,000 joint property rights housing units, and by accelerating growth in housing supply, upgrading construction quality, and making fair and rational allocations, will be able to further stabilise public expectations, reduce speculative investment demand for housing, expedite the use of housing for residential purposes, and effectively advance the stable and healthy functioning of the Beijing real-estate market.”
In 2017 Beijing has also dramatically increased the total supply of land available for residential housing purposes.
Data from Centaline Property indicates that as of 21 December there were a total of 76 plots of land supplied in Beijing for residential housing purposes, with a planned construction area of 10.5 million square metres, for a year-on-year rise of 318% and a near four year record high.
In sharp contrast to the plunge in home transactions, Beijing has seen at least least 283.2 billion yuan in land market transactions in 2017, for a year-on-year rise of at least 220%.
“Following ongoing controls imposed upon the housing market, the capital pressure on developers has become increasingly large,” said Zhang Dawei. “Although the full year land market transaction sum has breached a new record, land prices have fallen significantly towards the year’s end.
“The land premium rate has fallen markedly, with the residential land premium rate for the full year at 26% in Beijing, while also dropping to 8% since November.
“Aside from a land plot in Shijingshan with a premium rate of 19%, other plots have seen their premium rates approach zero.”