Property financing

Shanghai’s month-on-month gain in existing home price picks up to fastest in at least 22 months

Beijing sees 13 straight months of increase in existing home prices in September, but sales fall for 2nd month in a row

PUBLISHED : Tuesday, 20 October, 2015, 8:07am
UPDATED : Tuesday, 20 October, 2015, 10:57am

Sales performance diverged last month in Beijing and Shanghai, mainland China’s two most important housing markets, but both saw prices of existing homes hitting new records, the latest SCMP-Century 21 index showed.

Secondary market home prices rose 1.3 per cent in Shanghai in September from August, the fastest monthly gain since at least December 2013, when the index compiled by the South China Morning Post and mainland consultancy Century 21 Real Estate came into being.

That took average asking prices for existing homes to a record high of 36,351 yuan per square metre in the country’s financial hub.

Beijing also refreshed its record, with existing home prices rising 0.2 per cent in September from August to 42,881 yuan per square metre. That was the 13th consecutive monthly increase.

As a result, the home price index in Beijing edged up to 164 last month from 163 in August, while the reading in Shanghai rose to 150 from 148 during the period.

However, the sales have diverged.

“The existing home market in Beijing cooled in September as impact of the policies waned,” said Century 21. “Shanghai posted stellar performance as end-users re-entered the market.”

Transaction of existing homes fell 5.5 per cent in September from August to 19,604 units in Beijing, but rose 4.1 per cent in Shanghai to 36,123 units.

On the one hand, Beijing home buyers were no longer sensitive to interest rates and down payment cuts, as more than two-thirds of them were trading up into bigger and better homes and it took time for them to sell one or two of their existing homes to buy a new one, Century 21 said.

On the other hand, strong transaction from March through July had digested the best of existing homes in the market, thus hunting for the right homes now took longer, it added.

The sentiment in Shanghai was different. Some buyers resorted to panic purchases after seeing surges in land prices. They bought some very old homes which attracted little interest in the past.

Century 21 said: “More recently, the volatile stock market is pushing funds back into the housing market for safe haven, although it affected [Shanghai’s] housing transactions in the past few months.”

In year-on-year terms, prices of existing homes rose 5.7 per cent in Beijing last month, the same pace as in August. But Shanghai posted the highest annual pace in 13 months, of 6.7 per cent.