Home price rises quicken in Beijing and Shanghai in October but sales cool, index shows
Falling transactions to cap further home price rises in Beijing and Shanghai’s secondary markets
Price momentum built up last month in existing home markets of China’s two most important cities -- Beijing and Shanghai -- but this cooled transactions and threw the sustainability of the increases into doubt, the latest SCMP-Century 21 index showed.
The average asking price in Beijing’s secondary home market rose 1.1 per cent in October from September, the fastest pace in a year. It gained even faster in Shanghai by 1.6 per cent, the quickest since at least January 2014, when the South China Morning Post started its partnership with mainland consultancy Century 21 for the index.
As a result, the home price index edged up to 165 last month from September’s 164, and rose to 153 in Shanghai from 150 during the same period.
But transactions cooled off in both cities, falling 16.6 per cent in Beijing to 16,356 units and declining 7 per cent in Shanghai to 33,590.
“[Transactions in] Beijing have been falling since its peak in July,” Century 21 said. “But Shanghai saw a recovery in the latter half of October after suffering a decline in the first half due to public holiday.”
It added that pent-up demand was released in Beijing during the first half of this year, spurred by a slew of government policies and that current buyers were mainly trading from smaller units into larger ones and were more rational.
“In some areas, the sellers are expecting too much, which slows down transactions,” Century 21 said. “And quite a few buyers are expecting further interest rate cuts, thus delaying purchases.”
In Shanghai, monthly transactions have stayed above 30,000 units since April, double the amount in the primary market. Buyers returned in the second half of October after a long holiday at the beginning of the month.
“In the short term, cooling transactions will cap price rises,” Century 21 said, adding that the ending of the country’s decades-long one-child policy would boost housing demand in the long run, although the policy is not going to be effective immediately.
In year-on-year terms, sales soared, by 63.4 per cent in Beijing and 97.2 per cent in Shanghai.
Prices also gained 5.7 per cent in Beijing last month from a year earlier to 43,344 yuan per square meter, and they rose 8.4 per cent in Shanghai to 36,927 yuan per square metre.