China property: why an uptick in Beijing, Shanghai home sales is unlikely to last

‘Overall, residents are still quite cautious about buying homes, and as the market enters into its off-season in January, sentiment will fall even more,’ China Index Academy executive says

Home prices in 70 Chinese cities fell at their fastest pace in almost nine years in December, according to data from the National Bureau of Statistics

Reading Time:4 minutes

The Lujiazui financial district in Shanghai. The impact of the city’s easing measures has been more modest than in Beijing, with new home sales expanding by 2.4 per cent year on year in December. Photo: Bloomberg

Published: 10:00am, 21 Jan 2024

A month after China’s local governments unveiled their latest measures to ease home purchase restrictions and boost demand, the country’s two largest cities have seen an uptick in the number of homes sold.

However, analysts said that this trend is far from sustainable, as demand is being weighed down by persistently low homebuyer confidence and expectations that home prices could drop even further.

Beijing and Shanghai issued their latest round of support measures last December to shore up confidence. The measures, which included cuts to down payments and extensions of mortgage repayment deadlines, seem to have yielded solid results. Home purchase sentiment, as measured by the number of new and pre-owned homes sold, rose 3 basis points month on month in Beijing and 7 basis points in Shanghai, according to a January report published by China Index Academy, a real estate research firm.

The transactions of new homes in Beijing jumped 38.5 per cent year on year to 6,106 units in December, bringing the total volume of new homes sold across the city to 66,000 units, or 74.9 million square metres. Meanwhile, new home prices rose by 0.17 per cent year on year and the prices of pre-owned homes dropped by 0.63 per cent in the same period.

The impact of the easing measures in Shanghai has been more modest, with new home sales expanding by 2.4 per cent year on year, while prices rose by 0.25 per cent. The sales of pre-owned homes grew by 9.4 per cent year on year, while prices fell by 0.8 per cent, according to the report.

An increase in new home sales was driven mainly by improved supply, instead of demand, said Chen Wenjing, director of market research at China Index Academy. “Overall, residents are still quite cautious about buying homes, and as the market enters into its off-season in January, sentiment will fall even more,” he said.

Select Voice

Choose your listening speed

Get through articles 2x faster

1.25x

250 WPM

Slow

Average

Fast

00:0000:00

1.25x