Beijing’s home market enters deep freeze

The property market in Beijing is freezing up after the city government took the lead to step up control measures on home purchases a month ago.

Under a spate of heavy-handed curbs launched since March 17, sales in the primary and secondary residential markets in the city have slumped while apartments built on commercial and office land, an alternative product, also faced a bleak future.

As of Sunday, just 1,106 units of new private homes were sold this month, down 66 per cent from a month earlier and 79 per cent year on year, according to Beijing-based real estate consultancy Yahao.

Last week also saw 4,580 homes changed hands, a 31.4 per cent fall from the week to March 19, around the time when the curbs were introduced, Centaline data showed. During the period, the price index has slid to 38.5 from 87.9.

Meanwhile, a government crackdown on apartments built on commercial and office land, a previously popular housing product that caters to youngsters and those targeted by the control measures, led to a plunge in transactions in this market segment.

From a peak of 2,265 units sold in the week before the tightening, only 62 units were sold in the first week after, falling further to 53 and then 31 in subsequent weeks.

The average selling price also eased to 34,828 yuan (US$5,060) per square metre from 47,727 yuan during the period.

On March 26, Beijing banned the sale of business apartments to individuals for residence and forbid agents from listing new and secondary apartments.

Yahao’s deputy general manager Gao Shan said the price caps imposed on primary homes also dampened developers’ willingness to sell new projects, further squeezing supply in the market.

So far this month, only two projects were released for sale while most others were put on hold as the regulated prices made it virtually impossible for developers to generate any profits.

A price cap of 150,000 yuan per square metre has also been placed on the secondary market across the city.