Drop of second-hand house prices shows cooling market in 2019

Housing prices in China have become stable thanks to the strict regulation in the past two years, according to Economic Information Daily, citing December price changes of commercial residential buildings in 70 large and medium-sized cities released by the National Bureau of Statistics on Jan 16.

Home prices in first-tier cities saw a year-on-year growth of 0.5 percent in 2018, down 9.6 percentage points compared with the last year. In terms of second-hand housing, the year-on-year increase of 0.7 percent was 11.3 percentage points lower than that of the same period last year.

Liu Jianwei, a senior statistician with the NBS's urban division, said that transactions of new commercial residential buildings in first-tier cities increased in December 2018 with rising prices, while those in second- and third-tier cities continued to remain stable.

In December, 59 of the 70 large and medium-sized cities witnessed price rise of newly built commercial residential buildings, while eight saw prices fall. Only 24 cities saw an increase of more than 1 percent, nine fewer than in November, the Bureau said.

Compared with the newly built houses, with many of them facing price limits, the price of the second-hand housing market can represent the real market price, especially in the first- and second-tier cities, in which second-hand housing transaction volume has accounted for more than half of total transactions, said Zhang Dawei, chief analyst at Centaline Property Agency Ltd.

He said prices of second-hand houses in first-tier cities fell by 0.3 percent last month, while second-hand houses in 31 second-tier cities rose by 0.1 percent. Second-hand housing prices in 35 third-tier cities increased by 0.3 percent during the same period, all witnessing drop of growth month-on-month.

According to Zhang, December was the month with the largest number of price cuts for second-hand homes in first-tier and second-tier cities since 2016, which has started the second-hand housing price reduction.

Feng Jun, president of the China Real Estate Association, said second-hand houses are more sensitive to the market. House developers may maintain the price of new houses at a certain level due to rigid costs and sales strategies, but second-hand houses are supplied by individuals, and they are more sensitive to market information.

The decline of second-hand housing prices will continue in the next few months, Zhang predicted, adding that new housing price adjustment will start in certain cities. Restrictions in purchase, price, loan, and sales will sure guarantee a cooling market in this year, Zhang added.