Decline in Beijing’s used home prices accelerates as Shanghai’s edge up
The average asking price of second-hand homes fell 2.1 per cent in Beijing last month from May, the fastest pace so far this year, while they rose for a sixth month in Shanghai, by 0.6 per cent, the SCMP-CTC index shows.
In year-on-year terms, the price of used homes in Beijing rose 15.1 per cent to 41,243 yuan (HK$51,825) per square metre in June. It jumped 17.8 per cent in Shanghai to 34,768 yuan per square metre, according to the index, the product of a collaboration between the South China Morning Post and Century 21 China Real Estate (CTC), a property consultancy.
CTC said that despite the rise in asking prices, actual transaction prices in Shanghai started to drop last month. Fourteen of the projects it monitors in the city suffered a dip in deal prices.
"There is no doubt that the secondary home markets in Beijing and Shanghai have entered a period of deep consolidation," CTC said.
"A rising number of sellers are cutting prices, and by a larger margin, yet buyers keep waiting."
The SCMP-CTC secondary home price index in Beijing fell to 157 last month from 161 in May. In Shanghai, it edged up to 144 from 143.
As the capital offers a growing number of homes for self-use priced 30 per cent lower than similar units in the vicinity, most homebuyers prefer to queue for government-backed homes than buy immediately in the market, driving down the volume of transactions in second-hand and new homes in Beijing.
In Shanghai, the volume of secondary home transactions fell to the second lowest in 26 months, higher only than in the traditionally slack season of the Spring Festival, which fell in February this year.
The number dropped 13 per cent from May to 13,111 last month, 43 per cent lower than a year earlier.
"The main reason is tight bank credit policy," CTC said. Chinese lenders are responding in slow motion to the central bank's call for supportive mortgage loans to first home buyers.
CTC predicted a pick-up in transactions in the second half, as more cities are expected to follow the lead of Hohhot in Inner Mongolia and relax home purchase restrictions.
Meanwhile, listed developers will increase discounts as they face heavy pressure to hit annual sales targets announced at the beginning of the year, CTC said.
Pent-up demand accumulated in the past six months also needs to be released, it added.
"Despite all this, the transaction recovery in the second half will be limited," the consultancy said.