Housing Prices Fall in Major Chinese Cities as Real Estate Market Cools

Sale volume and number of transactions dropped in Beijing, Shanghai, and other cities

A real estate agent waits for customers inside his office in Beijing on Jan, 17, 2016. (Fred Dufour/AFP/Getty Images)

Throughout November, both property prices and transactions have maintained a downward slide in the Chinese cities of Beijing, Shanghai, Guangzhou, Shanghai, and Shenzhen. Meanwhile, real estate developers have purchased less land, purchasing just 60 percent of the October total.

Chinadatapay, a Chinese data supplier, reported that in November, real estate developers made 68 purchases of land for a total value of 62.6 billion yuan ($9.16 billion)—the lowest land-purchase volume in 2018. It is just 35 percent of the figure for November 2017.

Vanke, one of China’s biggest real estate developers, made just two property purchases at a cost of 2.449 billion yuan, just a quarter of the value of the firm’s purchases in October.

Country Garden, another major Chinese real estate developer, bought one parcel of property at a cost of 4.4 million yuan in November. By comparison, Country Garden spent 41 billion yuan in its busiest month this year.

Data from the Centaline Property Research Center shows that as of Nov. 29, bidding for 282 properties in Chinese first- and second-tier cities—all cities with a population of 5 million or more—had failed, while the number of failed third- and fourth-tier bids was 944. These are the worst numbers in the past six years.

Property prices in Beijing have decreased slightly for three consecutive months, while the transaction volume of real estate has declined rapidly, China Business News reported Dec. 1, citing the Beike Institute and Anjuke Data Analysis.

The volume of new house purchases decreased about 35 percent in October, while previously owned home transactions fell about 13 percent.

Data from the Easynet Property Data Center shows that in Guangzhou, new house purchases in November amounted to 584,000 square meters (6.29 million square feet), or 36.59 percent less than in October.

The Guangzhou Real Estate Agents Association recorded that transactions for previously owned houses in the same period reached 377,900 square meters, 51.43 percent less than November 2017, and a record low in the past 33 months.

Data from Ankeju Data Analysis showed that the Shanghai real estate market also softened in November, with activity down about 14 percent from the year-earlier month.

Shenzhen is a major city in southern China’s Guangdong Province that neighbors Hong Kong. Shenzhen is the 22nd-most competitive financial center in the world, according to the 2017 Global Financial Centers Index, and is a China high-tech city.

Even while benefiting from strong economic cooperation with Hong Kong, Shenzhen’s real estate market faces the same challenge as other Chinese cities.

In the past six months, the number of houses in foreclosure increased 50 percent, according to Guangan Juye, a Shenzhen Foreclosures Company. There were 2,800 houses in foreclosure by November, 33 percent higher than last year. Furthermore, people bought homes originally valued at 7.5 million yuan for just 4.9 million yuan.

As reported by the official website of the Shenzhen Intermediate Court, there were 26 houses in foreclosure in October, but only 15 of them had been sold. At auction, normally there were only two people quoted. The best case had five bidders, and in the worst case, no price was offered.

The “bitter winter” of the real estate sector is now a popular topic in Chinese public discourse.

On Nov. 16, 51 financial organizations, including almost all business banks and more than 20 real estate developers, met at the China Securities Regulatory Commission office to discuss solutions for, and the future of, the Chinese real estate market.

While many Chinese economists think Chinese authorities will change policy to increase property prices because China’s market is state-controlled, state media have so far not indicated that will happen.