China’s real estate industry has completely stalled. Massive check-outs of luxury properties in Beijing | Shanghai school district housing | First-tier cities | Second-hand housing

[New Tang Dynasty News, Beijing time, November 20, 2023]The CCP’s intensive policies to stimulate the real estate market in various places have failed, and the real estate market has not waited for the peak sales season of “Golden Nine and Silver Ten”. The real estate industry is completely stalled, and experts predict that it will continue to bottom out in the future. Some analysts believe that China’s real estate industry has completely collapsed.

Massive check-outs of luxury properties in Beijing

Luxury properties in Beijing are no longer available for sale. According to the Beijing luxury market report for October released by an agency that specializes in luxury homes, both the transaction volume and price of new homes and luxury homes dropped in October, with 310 units transacted, a year-on-year decrease of 46%; the average transaction price was 92,000/square meter, a year-on-year decrease of 8.7%. . There are still 4,500 new homes and luxury homes in the market. If calculated based on 300 units per month, it would take 4 years to sell out.

Market news has recently spread that there has been a large-scale check-out of luxury properties in Beijing. Zhang Dawei, chief analyst of Centaline Real Estate, said: “The properties sold in early September were refunded by more than 30%.”

After Beijing launched loosening policies such as “recognizing a house but not a loan” and “buying one for one sale” in September, some home buyers thought the market was about to take off and started buying houses as soon as possible. Unexpectedly, the market enthusiasm only lasted for half a month before the decline began to appear. The transaction volume of second-hand houses and new houses has begun to decline.

Among them, in terms of new building transactions, Centaline Real Estate data shows that the transaction volume from September 2 to September 5 was 1,800 units, 900 units, 200 units, and 100 units respectively.

Rich people are selling second-hand houses at reduced prices. The inventory of second-hand houses has skyrocketed and prices are being reduced every day. As the prices of second-hand houses continue to drop, discounts and promotions for new houses have also increased, forcing second-hand houses to continue to drop in price.

People who had made a deposit due to the stimulus of the policy regretted it and began to check out. But checking out was harder than expected. If a deposit has been paid, 20% of the total house price will be compensated according to the contract, and the signature of the regional leader of the sales group is also required.

A real estate agent said that several home buyers had paid nearly 200,000 in deposits, but later the houses fell in value and they did not even need the deposit.

Checking out isn’t just because there’s no end in sight for falling house prices, there are other reasons as well. First, they are suddenly faced with layoffs and unemployment, and are under great pressure to repay loans. Second, they cannot sell their old houses and do not have enough funds to pay the down payment and sign the contract for the new house.

The reason why old houses cannot be sold is because the transaction of second-hand houses in Beijing has also been sluggish. Even houses in school districts that were popular in the past because they were “tickets to prestigious schools” are unavoidable.

In Dongsisi Tiao, Dongcheng District, Beijing, the price of a 72-square-meter three-bedroom house has dropped by almost 1 million (approximately US$139,000) in two years. In Debao Xinyuan in Xicheng District, one-bedroom units fell by 25% in less than a year.

Some brokers said that in fact, since this year, whether it is luxury homes, improved properties, or just-in-demand properties, the phenomenon of withdrawals from subscriptions has been relatively common.

Some netizens commented that in reality there were so many people subscribing, it was all a farce directed and performed by the developers themselves.

Housing prices in Shanghai school districts fell back to six years ago

Housing prices in school districts in the most central areas of Shanghai have also plummeted. The unit price of this second-hand house, which is nearly 30 years old, was still competing with luxury homes such as “Tomson Yipin” two years ago. Recently, it was reported on the Internet that “with a loss of 3 million (approximately US$416,100) in two years, the price of a house in Shanghai Fuwai School District dropped from 10 million to 6 million” (from approximately US$1,386,800 to US$832,000).

In the fourth neighborhood of Meiyuan District, which is closest to the Century Avenue subway station and close to the shopping mall, the agent said that “prices have dropped back to 2017.”

Six months ago, there was an online purchase record of more than 100,000 per square meter for housing in school districts in Shanghai’s core areas. As second-hand housing has gone cold, the bubble of housing in school districts has been quickly squeezed out. Many intermediaries have mentioned that second-hand housing in Shanghai has fallen to varying degrees, but the premium and moisture of housing in school districts have been squeezed out even more.

According to monitoring data from Shanghai Lianjia Research Institute, a total of 13,300 second-hand houses were sold in the city in October, a decrease of 13% month-on-month and a year-on-year decrease of 19%.

Data shows that the stimulus effect of the current favorable policies has passed, and housing prices have fallen back to before the policies were introduced.

Prices of new homes in first-tier cities have fallen, while second-hand homes have hit rock bottom again

In September, under the overall stimulus of loosening policies, first-tier cities saw an increase in transactions and a slight rebound in selling prices of new and old houses. However, in October, house prices did not stabilize the trend in September and continued to decline, and the decline expanded.

The housing price index in 70 cities in October showed that the new commercial residential housing price index fell for five consecutive months, falling 0.4% month-on-month in October, and the decline expanded by 0.1% compared with September. Among them, the first-tier cities Beijing, Guangzhou and Shenzhen decreased by 0.4%, 0.7% and 0.5% respectively from the previous month.

Li Yujia, a housing policy researcher in Guangdong Province, analyzed that since this data started to fall in June, the overall decline has been expanding. The decline remained stable in September, supported by a month-on-month rebound in sales, but expanded again in October.

At the same time, the second-hand housing market has once again hit “bottom”.

In October, second-hand house prices in 67 of 70 large and medium-sized cities fell compared with September. Among them, Beijing, Shanghai, Guangzhou and Shenzhen all fell by more than 0.5% month-on-month, with Beijing having the largest decrease of 1.1%.

At the same time, the cooling trend of the property market in second- and third-tier cities has not changed, and selling prices continue to fall.

It is generally believed that the reason for the downturn in the property market in October has a lot to do with the lack of market confidence. Country Garden suffered a second thunderstorm, and real estate risks continued to spread. State-owned enterprises and stable private enterprises also experienced a decline in stocks and bonds. These all affect market sentiment.

Real estate investment continues to decline and decline expands

On November 15, the National Bureau of Statistics of the Communist Party of China released the basic situation of national real estate from January to October, saying that from January to October, national real estate development investment fell by 9.3% year-on-year, and the decline continued to expand by 0.2% from January to September. Among them, real estate development investment fell by 11.3% year-on-year in October, a slight increase from the 11.2% decline last month. The year-on-year decline in a single month has been more than 10% for six consecutive months.

From January to October, the sales area of ​​commercial housing decreased by 7.8% year-on-year, while the area of ​​commercial housing for sale increased by 18.1% year-on-year, of which the area of ​​residential housing for sale increased by 19.7%.

Statistics from the Zhuge Data Research Center found that investment in real estate development has maintained negative growth for 18 consecutive months, especially the lack of willingness to start new construction, which has led to a decline in overall investment.

The lack of willingness to start new construction and the expansion of investment decline are all affected by the decline in sales and the difficulty of selling houses.

In order to stimulate sales in the property market, real estate policies across China have been introduced in a spurt since the end of August, anticipating the arrival of the traditional marketing peak season of “Golden Nine and Silver Ten”. According to incomplete statistics from the Zhuge Data Research Center, real estate policies were relaxed 144 times in September, setting a new high in the frequency of monthly adjustments this year.

The sales margin of the property market in September showed the wave of stimulation, but the sales level was still lower than that in March and June; the market sales scale in September hit a new low for the same period in the past eight years. October was another big cooling down, with sales area and sales falling by 28.4% and 25.9% respectively compared with September.

Many Chinese industry analysts predict that the real estate market will continue to fluctuate downward.

China’s real estate industry is collapsing

A report released by Japanese financial services institution Nomura Securities on November 15 stated that the number of “uncompleted buildings” in China is alarmingly large. Lu Ting, chief China economist at Nomura Securities, said they estimate that there are about 20 million unfinished pre-sale buildings in China. To complete these unfinished buildings, approximately 3.2 trillion yuan (approximately US$44.38 million) will be needed.

The Nomura report also stated that China’s real estate industry is collapsing and developers are generally facing a severe credit crisis. The problem of developers being unable to deliver buildings will become a social problem that threatens stability.

Meng Jun, a Chinese entrepreneur living in the United States, recently told The Epoch Times that many people did not expect that 2023 would be the worst year for China’s entire economy. This year would be worse than the three years when the epidemic was cleared. We have already seen that almost all foreign capital has withdrawn, and most of the private enterprises have basically closed down, including the real estate industry. The entire real estate industry has disappeared. Now the crisis in the entire financial industry is about to explode at any time. In fact, it has already exploded, but The CCP media are not allowed to report it.

(Reprinted from The Epoch Times/Editor: Yue Yuan)