Home » Business » Real Estate
Oversupply delays home market recovery
Print Edition
RECOVERY in China’s real estate sector slowed in October as fewer cities reported price increases, mainly due to continuing oversupply of homes.
Prices grew in 27 cities in October from a month earlier, 12 fewer than in September, the National Bureau of Statistics, which tracks housing prices in 70 cities nationwide, said in a statement yesterday.
Prices in 10 cities were flat while they fell in the remaining 33.
Shanghai led the gainers with a month-on-month increase of 2.1 percent, accelerating from a 1.9 percent rise in September.
It was followed by a 1.3 percent monthly rise in Xiamen in Fujian Province and Nanjing in Jiangsu Province. Shenzhen in Guangdong Province, which had led the gainers for 10 consecutive months, fell to fourth spot with home prices climbing 1.2 percent from a month earlier.
“The number of cities seeing month-on-month rise in prices fell in both new and pre-owned home markets, which resulted in an overall decelerating pace around the country,” said Liu Jianwei, a senior bureau statistician.
Prices of new and pre-owned homes last month continued to rise faster year on year — up 1.5 percentage points and 1.4 percentage points, respectively, from September’s rises — with more cities seeing growing prices, the bureau’s data showed.
Nationwide, new home prices rose in 16 cities year on year, up four from September.
Shenzhen continued to lead with an annual surge of 40.3 percent, followed by gains of 12.7 percent in Shanghai, 8.1 percent in Beijing and 7.1 percent in Guangzhou. In September, the four gateway cities recorded year-on-year rises of 38.3 percent, 9.7 percent, 5.9 percent and 4.9 percent, respectively.
In the pre-owned home market, 24 cities saw prices grow from a year earlier, up nine from September.
“Trends in Chinese real estate have diverged notably,” Liu said.
Home prices in top-tier cities, where demand is high, saw strong growth. In second-tier cities, prices were mixed, while they continued to drop in third-tier cities.
China’s housing market took a downturn last year due to weak demand and a supply glut. The cooling has continued into this year.
To combat the slowing housing market, China has eased down-payment requirements for second-home purchases, and some local governments have rolled back their restrictions on home purchases.
“The decrease in the number of cities registering month-on-month price increase can be interpreted as a signal that the country’s residential sales market is showing fatigue after strong growth over the past months which was mainly boosted by easing policies from the government,” said Lu Wenxi, a senior manager of research at Shanghai Centaline Property Consultants Ltd.
“The market will begin to stabilize as it is approaching the year end, which is a traditionally quiet period for property sales.”
The country’s unsold home inventory hit a record of 686.3 million square meters at the end of October, up 17.8 percent from the previous year.
“Oversupply is the most serious problem in the property market. Home prices will remain soft if the glut continues,” said Yang Hongxu, deputy head of property market researcher E-house China R&D Institute.
According to Yang, a sluggish housing market will delay the bottoming out of the Chinese economy and even threaten the stability of the financial system as properties are widely used as collateral for bank loans.
China’s top leaders have attached greater significance to the real estate sector, an important pillar industry of the world’s second-largest economy, with a focus on reducing the huge inventory.
President Xi Jinping urged more efforts to address oversupply, when he presided over a meeting of the Central Leading Group for Financial and Economic Affairs last week.
Earlier this month, Premier Li Keqiang told a Cabinet meeting that the government should overhaul China’s household registration system in a bid to encourage more rural residents to settle in cities to boost consumption of homes and electronic appliances.
“Previous stimulus played a part in accelerating the process of de-stocking but cannot reverse the oversupply trend, especially in smaller cities, in the short term,” said Chen Jie, a researcher with Shanghai University of Finance and Economics.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
