China’s home sales declined in traditional peak season, Shenzhen’s second-hand home sales hit lowest in nearly 10 years

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China’s housing market cooled further in October, a traditional peak season, and second-hand home sales in the technology hub of Shenzhen hit the lowest level in nearly a decade.

Home sales in China’s 50 major cities reached about 25.28 million square meters in October, the lowest level in nearly five years and sliding more than 20% from the same period last year, according to data from the China Index Academy, one of the country’s largest independent real estate research firms.

In the 16 key cities, home transactions fell 24.6%, with transactions in tier-2 cities slumping 34.6% and in tier-3 cities down 24.6%, according to the data.

September and October, called “Golden September and Silver October” in China, is a traditional peak season for the housing market. Slowing home sales in the season point to an overall cooling down of the housing market, analysts say.

In Shenzhen, only 1,605 units of second-hand homes were sold last month, marking the lowest level since March 2012 and down 9.1% from a year earlier, according to Shenzhen official data. Sales measured by floor space fell to about 150,400 square meters, down 66.42% from a year earlier, according to Shenzhen official data.

According to data from Leyoujia, average listing prices of second-hand homes in most districts of Shenzhen fell by 0.5% – 1.5% in October from a month earlier. In the past one months, about 15% home owners lowered listing prices. New listings of second-hand homes in Shenzhen jumped above 55,000 units in October, sharply higher than second-hand home transactions of the month, leaving a large number of homes on sales, showed the data.

However new home transactions in Shenzhen rose 41% in October from a month earlier to 4,712 units and new home sales by floor space jumped 48.1% to about 486,000 square meters, according to Centaline Property.

In the capital city of Beijing, second-hand home transactions fell to 9,340 units in October, sliding 53.4% from a year earlier and down 25.7% from the previous month, falling for the seventh consecutive month, according to data from Centaline Property.

Shenzhen has a population of 17.56 million and Beijing has a population of 21.89 million, according to official data.

“Second-hand home sales fell below 10,000 units in Beijing, indicating an overall cooling trend in the housing market,” said Zhang Dawei, chief analyst at Centaline Property. “In Beijing, when second-hand home transactions drop below 15,000 units, it already means the housing market is weak. Now, sales below 10,000 units mark the weakest performance since March 2020 at the height of the Covid-19 outbreak.”

Property developers, which have been facing funding strains, see property sales decline. In September, the top 30 developers saw property sales fall by 8% month on month and slide by 35% from a year earlier, both accelerating from the previous month, according to E-House China Real Estate Institute.

In October, more than 80% of the top 100 developers saw home sales drop year over year, with 44 of them recording drops of more than 30%, according to the China Real Estate Information Corporation.

Average new home prices in the 100 cities stood at 16,189 yuan per squarer meters in October, rising by only 0.09% from the previous month, narrowing by 0.14% gain in September and slowing for the fourth consecutive month, according to the China Index Academy.

Average price of second-hand home stood at 16,026 yuan per square meter last month, down 0.04% from a month earlier, marking the first drop since June 2020 when the academy started publishing the price index. Among the 100 cities, 59 cities recorded month-on-month drops in second-hand home prices, the most so far this year.

Industry insiders say that the fast cooling of the housing market was due to tightening credit for the real estate sector, restrictions on home mortgage loan quota as well as extended waiting time for home mortgage loan approval.

Going forward, some cities’ housing policies are expected to be fine-tuned in the fourth quarter and the housing market is expected to improve slightly, although the overall regulatory environment will remain tough and the market faces more pressure in the short term, with property sales expected to decline further in the fourth quarter, said Chen Wenjing, deputy research director at China Index Academy.

The growth of home price rises are expected to narrow further and prices in some cities are likely to decline, Chen said.