Chinese home buyers wait as market cools down

0 Comment(s)Print E-mail Xinhua, October 21, 2017
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Guo Lian has been busy informing potential buyers of second-hand home bargains in recent days, but few have made purchases.

"Most are in wait-and-see mode while watching declining home prices," said the Beijing-based real estate agent.

The lackluster buying sentiment is a huge contrast to just months ago when many scrambled to buy in the city.

Prices of houses in many residential properties in Beijing had more than doubled in less than two years before local authorities announced tough measures to cool the market in mid March. Since then, prices of some have fallen more than 20 percent.

Similar control measures have helped to dampen the speculative demand in many other big Chinese cities. In "golden September" and "silver October," traditionally peak months for the property market, sales in many cities are weak.

In Guangzhou and Shenzhen, both in south China's Guangdong Province, some developers offered discounts and even promised salespeople higher sales bonuses.

During the first six days of the month, sales in 30 cities nationwide fell about 80 percent year on year, according to Centaline Property. In Beijing the figure fell 72 percent.

In September, China's home sales declined 40 percent year on year, according to China Real Estate Information Corp.

Zhang Dawei, chief analyst with Centaline Property, said judging from weak sales early this month, there will be no "silver October" this year.

"The flurry of tightening measures in various cities are weighing on the market," said Zhang.

China has made it clear that "houses are built to be inhabited, not for speculation."

To cool down the housing market, more than 100 cities or counties around China have introduced control measures, including purchase and sales limits and higher down payments and mortgage rates, since late September last year.

The northern city of Taiyuan was the latest to further tighten the housing market in mid-October, banning home sales within two years of purchases, following similar moves by eight other cities in late September.

Authorities have also been ordered to increase supply, add more public and rental housing and prevent consumption and credit loans from flowing into the housing market.

Meanwhile, rental tenants in some cities are now entitled to hukou, or household registration certificates, and are allowed to send their children to nearby schools, a right earlier only enjoyed by home owners.

The series of measures have taken effect, said Ding Shuang, chief Greater China economist with Standard Chartered Bank.

Land sales are an important source of government revenue, but China is seeking to cut its reliance on the real estate sector and build more affordable housing for its citizens.

Housing prices in many cities doubled over the past two years, leaving many complaining about the unaffordable prices.

"Excessive real estate investment could complicate China's efforts to rebalance its economy and upgrade its industry," said Ding.

The real demand will continue to drive up home prices in the mid-term, but the control measures could help slow the momentum and buy time for solutions, said Ding.

China needs a series of measures, including tighter lending, increases in supply and particularly, more taxes, to reduce market speculation, said Ding.

As the controls tighten and more money is squeezed out of the market, home buyers are becoming more rational and sales surprises are not expected during the fourth quarter, analysts said.

"More measures are coming out and the market should give up the illusion of policy loosening," said Yan Yuejin, senior researcher with E-house China R&D Institute.

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