China property

Beijing authorities vow to ensure new home prices ‘will not rise’

Latest figures also show pre-owned home sales in the capital have hit an annual record of 267,860 so far this year, representing 85pc of all transactions

PUBLISHED : Thursday, 29 December, 2016, 3:44pm
UPDATED : Thursday, 29 December, 2016, 7:42pm

Beijing’s city authorities have pledged to freeze new home prices in an effort to avoid a housing bubble, and promised to release more land to residential developers next year, in a city already scarce in available plots which have been pushing property prices ever higher.

Cai Qi, the acting mayor of Beijing, said on Thursday the municipal government will “make sure” next year’s new home prices will “not rise”, according to a report in the official Beijing Daily. New home prices have surged 29 per cent in the past 12 months in Beijing.

Separately, according to the latest market research from Centaline, one of the city’s leading estate agents, sales numbers of pre-owned homes in Beijing are now 5.7 times higher than new homes, a seismic shift for the local property market over the past decade.

Up to December 26 this year, Centaline said sales of pre-owned homes in Beijing hit a record 267,860, accounting for 85 per cent of the city’s entire private market transactions (excluding government subsidised housing).

The number dwarfed pre-owned home sales for last year of about 150,000 units, and exceeded the historical peak of 266,854 units in 2009. In 2015, existing homes sales made up 78.5 per cent of the market.

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Used property sales in Shanghai also accounted for nearly 80 per cent of that city’s total sales, according to Centaline, though a specific number was not available.

It said used home sales were at least twice the level of new sales in all four of China’s first-tier cities, Beijing, Shanghai, Shenzhen and Guangzhou. Extending that to 21 major Chinese cities, second-hand floor space accounted for 62 per cent of the total in the first 10 months of the year, its figures show.

“The surge in sales of existing homes in Beijing is explained by several special factors this year, which might not be repeated in 2017,” said Sun Qinglei, deputy general-manager of property agent Maitian.

“The accumulative monetary and home-purchase policies in the first three quarters have also contributed to the boom.”

The huge rise of China’s existing-homes market, however, is in contrast to Hong Kong where sales have declined steadily in recent years, from 92 per cent in 2011 to 71 per cent in 2015, according to Midland Realty data.

Sun noted that Beijing’s secondary market is dominated by sellers moving into larger homes, but predicted the numbers and market share of existing home sales were likely to fall next year.

For now at least, though, the thriving secondary market means boom time for the city’s major property agents such as Centaline, Homelink, 5i5j and Maitian.

Centaline’s latest figures show in Beijing alone, assuming an average four million yuan price tag for an existing property, those 267,860 deals translated into 1.08 trillion yuan worth of sales.

And assuming a 2 per cent average agency fee, the city’s agents could have raked in 21.6 billion yuan. Across the country in those 21 cities, too, that agents’ fee figure mushrooms to around eight trillion yuan.

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Centaline analyst Kang Peng said the rise of China’s existing home market shows people are taking a fresh look at how to take their first of next step onto the property ladder.

“Statistical bureaus and markets have traditionally paid more heed to the new-home prices, but in Beijing new home sales are now taking a more marginal role.

“Also, transactions taking place in peripheral regions, prices have been much lower than well-located existing homes,” Kang said.

He uses the example of Shenzhen, where new home prices are already beating those in Beijing. But in the secondary homes market, average transaction prices in Beijing were 56,771 yuan per square metre in November, while in Shenzhen they were 46,952 yuan.