China’s property bull run in smaller cities may be tiring out as curbs to tame home prices bite
‘Developers and sellers are no longer setting aggressive prices and the market is starting to cool down,’ said Samuel Wong, research associate director at property agency Midland Realty.
The red-hot property bull run seen across China’s smaller cities may be tiring out, as government curbs intended to tame runaway prices rattle the housing sector, one of the economy’s most important drivers.
In second-tier cities, transaction volume of second-hand homes has plunged over the past two months. Frenetic new home sales are beginning to lose energy. And home prices have slid in some places, too.
The more than two dozen metropolises categorised as second-tier are some of China’s most prosperous towns. Smaller than megacities like Beijing and Shanghai, they are mostly provincial capitals located in the eastern coastal region.
Surging home prices in these cities have been a main force fuelling the fast expansion of China’s property industry over the past two years and boosting the country’s economic growth. But they also have caused distress among those who cannot afford to buy as well as worries of a property bubble, prompting the government to tighten its grip.
“Developers and sellers are no longer setting aggressive prices and the market is starting to cool down,” said Samuel Wong, research associate director at property agency Midland Realty.
The sell-through rate – comparing the units sold and the total units of a new development project, indicating its popularity – declined in 11 cities in August and 16 cities in September, according to statistics from consultancy China Real Estate Information Corp (CRIC).