Beijing home sales remain at record levels despite curbs
Beijing home sales remain at record levels despite toughened home-buying rules being imposed on the city.
The capital city sold 1,491 primary residential units from March 6 to 12, representing 24 per cent growth on the same period last month, according to Centaline Property data.
Excluding commercial residential mixed apartments, transactions of normal apartments and villas rose 121 per cent.
Average new home prices in the city also climbed 6.85 per cent to 42,970 yuan per square metre.
“In anticipation of further price growth, home-buyers have been rushing to the market since the end of last year,”said Guo Yi, marketing head at Yahao Real Estate, a Beijing-based property consultancy.
“Market liquidity is abundant, institutions and individuals still have easy access to low cost capital,” she said.
The second hand market is even more frenzied, say experts.
A project called Beijing Fengjing in Changping District, 50 kilometers north of downtown Beijing, is now selling at as much as 48,500 yuan per sq m, a 15 per cent rise in the past three months and a 73 per cent surge from a year earlier.
The Beijing authorities have been implementing the strictest home-buying regulations in the country, including a 35 per cent down payment requirement for first-home buyers and a 50 per cent threshold for those who already own an apartment in the city.
Non-locals must have worked in the capital for at least five consecutive years even to be eligible to buy a flat.
The city has also set further price caps on some newly launched projects, shortened the mortgage duration of second-home borrowers from 30 years to 20 years, and reduced discounts on mortgage rates for first-time buyers, following mayor Cai Qi’s vow last December to make sure skyrocketing home price “will not rise”.
But Guo conceded the situation will be hard to improve as long as the serious shortage in supply continues.
“Only 420,000 square metres of new land for commodity apartment development was released by officials last year in Beijing, compared with an 8,000,000 sq m annual demand,” Guo said.
The unending enthusiasm for home-buying is also high in other big cities, despite similar tightening of home-purchase rules rolled out since late last year to cool the market.
“The sales-through rate has been continuing to pick up in first- and second- tier cities in the past few weeks, because there is still a big demand,” said Alfred Lau, a property analyst at Bocom International.
Developers also posted better-than expected contracted sales growth in January and February this year.
For instance, Sunac China, which focuses on property development in leading cities such as Beijing, Shanghai and Tianjin, achieved 12 billion yuan in sales last month, an astonishing 149 per cent year-on-year growth. Its sales in the first two months jumped 83 per cent.
Market remains under-supplied in first- and second-tier cities, Morgan Stanley analysts wrote in a report this month, after visiting Wuhan, Nanjing and Guangzhou.
“Most developers are unwilling to cut prices because land prices remain elevated and developers’ cash flow is healthy due to strong sales last year,” they said.
“Based on the land transactions in the past 12 months, China’s property prices are hardly going down,” said R&F Properties Chairman Li Sze-lim at its results briefing last Friday.
Li predicts a mild increase in average home prices this year but an “explosive growth” in second- and third-tier cities in eastern China, thanks to the strong economy and well-established express railway network.