Residential property market expected to stay firm for the rest of the year
May 4, 2021 Category China News Round-up, Weekly
China’s residential property market is expected to stay firm during the rest of the year in spite of the tightening of home-buying rules, industry insiders said. This could, however, still pose risks to those who may have entered the market purely for investment or speculative purposes, they said. In late April, Tang Hua, Senior Director Savills China, said she expects to see a surge in prospective homebuyers’ visits to properties during the five-day Labor Day holiday. Since the second half of last year, residential property markets in major Chinese cities have seen a quick pick-up, as the Covid pandemic is under control in the country. In the first quarter of this year, nationwide residential property investments soared nearly 29% year-on-year to CNY2.06 trillion. Sales of homes in terms of gross floor area surged 68% year-on-year and new home sales revenue surged 95.5%, according to the National Bureau of Statistics (NBS).
“In the 20 major cities tracked by JLL, new residential property transaction volume maintained good momentum with 98% year-on-year growth in the first quarter, and grew 32% from the same period of 2019,” said Sheng Xiuxiu, Research Director of JLL China residential sector. Performance of the four top-tier cities was extraordinary. Their combined sales volume of new homes reached about 10.7 million square meters in the first three months, more than twice the level in the same period of last year, and up 96% over that of the same period of 2019, Sheng said. “The double-digit growth in both investment and sales resulted from the low base of the same period of last year,” said NBS Spokesperson Liu Aihua. Xie Chen, head of research with CBRE China, however, said the high-digit growth may not be sustainable over the long term, due to the strengthening of financial regulations, tightened restrictions on home transactions and greater control over land supply. Such fine-tuning, be it at the national level or the local level, is aimed at both eliminating speculation and better protecting the firm demand, Sheng said. Lu Wenxi, Researcher with Centaline Shanghai, said residential markets in top-tier and hot spot cities in clusters such as the Yangtze River Delta, the Beijing-Tianjin-Hebei region and the Pearl River Delta region will likely remain stable this year, while other cities may see demand cooling off.
Experts expect that more local governments will fine-tune property-related policies in the following months to stabilize their home markets. They also suggested the market adjustment may provide good opportunities for homebuyers. “Any property bought for living will likely be held for the long term. Since the value of residential property will likely rise along with China’s economic growth, homebuyers will think purchasing property early is a better choice,” said Wei Feng Yu, Director of the Shanghai branch of Taipei-based Sinyi Realty. According to Wei, an apartment in Shanghai where the owner lives in for about seven to eight years can see average annual value appreciation of between 5% and 8%, the China Daily reports.
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