Guangzhou’s property market has been hit hard by tightened policies aimed at cooling real estate prices, and an outbreak of the more infectious delta variant of Covid-19.
The provincial capital of Guangdong and one of the cities in the Greater Bay Area cluster reported a slump in both home sales and viewings in the second quarter, traditionally a high season for transactions of residential property. Sales so far this month have fallen 77.9 per cent to 2,090 transactions, compared with the same period last year. The slowdown was stark compared with February, when the transaction volume surged 427 per cent from a year ago.
“The recent Covid-19 flare-up has magnified the effect of tightened property policies,” said Xiao Wenxiao, Guangzhou chief analyst at consultancy China Real Estate Information Corporation (CRIC).
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City authorities have stepped up the pace of new regulations, frequently issuing new policies since April, after the central government in Beijing named and shamed Guangzhou along with four other cities and ordered them to take action to stabilise the price of land and houses, as well as market expectations. China is keen on preventing any systematic risks in its highly geared property sector from leaking into its financial sector. As a result, Guangzhou launched a three-month campaign mid-April to clamp down on illegal practices and 18 problems in the local market.
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40 years of opening up and reform: How property became a driving force in the economy
40 years of opening up and reform: How property became a driving force in the economy
“The new policies have weighed down investment sentiment,” said Cheng Jieling, a senior property analyst at 58 Anjuke Real Estate Research Institute, a Shanghai-based property research firm. These also hurt demand from people who have a genuine need for housing, through tighter reviews of sources of loans for property purchases, she said.
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Before the policies took effect in April, Guangzhou’s home prices rose 9.9 per cent from a year ago, and the city of 18 million people ranked fourth among all Chinese cities, according to the most recent official data. The city was receiving the spillover from Shenzhen, the hottest property market countrywide, after the latter enacted some of its strictest policies of late to rein in the sector.
