Unsold housing stock in 100 cities rebounds from nine-month low

The unsold housing stock in 100 Chinese cities has risen significantly for the first time in 45 months, rebounding from a nine-month low, according to a report by Economic Information Daily.

The number of newly built commercial housing in 100 Chinese cities came to a total of 434.88 million square meters by the end of September, increasing by 2.9 percent month-on-month and decreasing by 5.5 percent year-on-year, after having shown a continuous downward trend with several rebounds in a few months in the middle since January 2015, data released by E-house China R&D Institute showed.

It means a turning point has come and a rising trend is expected to return in the fourth quarter, Yan Yuejin, research director at E-house China R&D Institute, said.

"From the year-on-year growth data, the first-tier cities are entering the replenishment phase with the inventory continuing to grow on a year-on-year basis from June after 34 consecutive months of year-on-year decline. And although in second-, third- and fourth-tier cities the inventory continued to fall, the decline continued to narrow," Yan said.

In September, 38 of the 100 cities saw year-on-year growth. Housing inventories in Hefei, Huizhou and Zhenjiang increased by 78 percent, 48 percent and 47 percent, respectively, while in Dalian, Anqing and Shenzhen they fell by 43 percent, 35 percent and 35 percent, respectively.

The decline on the inventory-sales ratio in the third- and fourth-tier cities was more obviously this year, the report said.

"In the second half of 2018, the shanty town refurbishment programs in third- and fourth-tier cities have slightly adjusted and cities with commodity housing inventory shortage and housing prices rise pressure will face more adjustment. Based on the policy, we think that the inventory-sales ratio in the third- and fourth-tier cities has basically hit bottom and is possible to face a rebound in the fourth quarter," Yan added.

He said the rise in housing inventory in September suggests the supply scale is large and market sale is modest.

"The rising trend will increase real estate enterprises' sale pressure, which will make them more dependent on the strategy of price promotions," Yan said.