Chinese property market to stay upbeat this year
Author: CSEBA / SEEbiz
3rd May 2021
BEIJING - Even after the May Day holiday, China's residential property market will remain upbeat as demand is expected to be 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 and head of China residential sales with Savills China, said she expects to see a surge in prospective homebuyers' visits to properties during the five-day Labor Day holiday.

"Speaking from experience, we believe potential homebuyers would include visits to properties as part of their holiday plan …(and) developers may also schedule promotional campaigns to attract buyers and secure deals."

Since the second half of last year, residential property markets in major Chinese cities have seen a quick pick-up as the spread of COVID-19 was better controlled in China.

In the first quarter of this year, nationwide residential property investments soared nearly 29 percent year-on-year to 2.06 trillion yuan ($320 billion).

Sales of homes in terms of gross floor area surged 68 percent year-on-year; new-home sales revenue surged 95.5 percent, said the National Bureau of Statistics.

"In the 20 major cities tracked by JLL, new residential property transaction volume maintained good momentum with 98 percent year-on-year growth in the first quarter, and grew 32 percent 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 percent 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 Liu Aihua, spokesperson for the NBS.

Various regions and related divisions are paying special attention to this new situation, and by conforming to the government guideline that "housing is for living in, and not for speculation", they have taken several effective measures to stabilize land prices, home prices and market expectations, Liu said.

Xie Chen, head of research with CBRE China, however, said the high-digit growth may not be sustainable over the long term, given various signs like 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, a researcher with Centaline Shanghai, said residential markets in top-tier and hot spot cities in clusters like the ones in the Yangtze River Delta region, the Beijing-Tianjin-Hebei region and the Pearl River Delta region will likely remain stable this year, while other cities may see demand cooling down.

Since the beginning of this year, new property-related policies have targeted the land market, credit measures, purchase restrictions, and sales requirements among others.

The goal is to plug the loopholes in existing practices, and end speculation in the property markets across the country, said Xu Xiaole, chief market analyst with the Beike Research Institute.

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