China’s property market experienced a moderate performance in the first half of the year, with a variety of new government policies aimed at controlling different parts of the sector. Price growth remained cool in the residential markets of China’s large cities, and experts foresee continued restrictions in the second half of the year. Chen Tong has the story.
Residential property prices in China’s first-tier cities saw sluggish growth in the first six months of the year. Shanghai’s prices have been seeing a slight decline compared with the same period in 2017. The major factor underlying stability at the moment appears to be a significant increase in supply. Data recorded by Savills show that new supply in residential property in the second quarter jumped by 111 percent from the first three months of the year. Sales volume during the same period jumped by 21 percent quarter-on-quarter, but declined by 30 percent year-on-year.
JAMES MACDONALD, HEAD OF RESEARCH SAVILLS CHINA “I think it’s within expectations. I think at the beginning of the year, we didn’t see much new supply coming to the market. I think a number of new projects see pre-sale approvals. So they launched their properties into the market. They’ve seen quite good pickup from the potential buyers. The amount is being ok. But the restriction is still biting the cost in term of borrowing from mortgages that increased quite significantly. So it’s dampening down a little bit in demand but there is still enough demand that absorbs the new supply coming to the market.”
Other cities including Beijing, Shenzhen, and Guangzhou also showed little growth in property prices. The keystone, as always is new and more detailed government policies regulating the market. In the first half of this year, a total of 192 new policies were launched around the country, 65 percent more than during the same period of 2017. They ranged from restrictions on speculative efforts by individuals to a ban on companies buying apartments. The government has also been encouraging companies to shift from concentrating on the sales market to focusing their efforts on the rental market.
STEPHENIE ZHOU, HEAD OF PROJECT SALES JLL CHINA “Restrictions have been especially strict on the demand side, and have eliminated almost all apartment speculation. Demand in the market now is in the hands of individual buyers who actually need to purchase an apartment. Speculative investments have been curbed, and that’s good for the long-term development of the market. If significant price increases show up anywhere, the government is sure to bring them under control. The market in the Yangtze River Delta has been stabilized and will continue stable in the following months.”
The new policy rollouts continue. Last week alone 20 new real estate policies were issued nationwide.