Economy Apr 16

China housing backlog still spurring new buyers

Prices of homes in top-tier cities holding steady, while officials in outlying cities offer incentives for buyers

China housing backlog still spurring new buyers 
Chinese homebuyers look at housing models of a residential property during a real estate fair in Xiangyang city in central Hubei province in April 2019. Prices increased marginally in March 2020 despite the lockdown and recession caused by the Covid-19 pandemic. File photo: Imaginechina via AFP

(ATF) A backlog of housing demand has led to a rise in house prices in some of China’s top-tier cities, especially for new buildings. Second and third-tier cities have also seen a slight increase, according to figures just released for March 2020 by the national Bureau of Statistics.

Preliminary calculations show that the sales price of newly built commercial housing in the four first-tier cities turned from flat in February to an increase of 0.2%, but the increase was 0.2 percentage points lower than that in January. Among these four, prices in Beijing were flat, while they rose just marginally in Shanghai (0.1%) and Shenzhen (0.5%), but fell narrowly in Guangzhou (-0.5%).

Outlying cities have begun offering incentives for people living in substandard or rented accommodation, as per recent government special bond applications. Some areas are already offering discounts on deed taxes, plus cash assistance such as grants.

For March, preliminary estimates show that the sales price of newly built commercial housing in first-tier cities rose by 3.3% year-on-year, a decrease of 0.2 percentage points from the previous month. The sales price of secondhand housing also rose by 2.4% year-on-year, which was an increase of 0.2 percentage points from February.

Prices of secondhand residential homes rose by 0.5% month-on-month. Among them, Beijing, Shanghai and Shenzhen rose 0.2%, 0.3% and 1.6% respectively, while prices in Guangzhou fell 0.2%.

This would indicate life is gradually returning to normal, with schools reopening, though officials are discussing whether to cancel summer holidays for students to catch up.

The price of newly-built commercial housing in 31 second-tier cities rose by 0.3% month-on-month, while the price of secondhand housing rose by 0.2% month-on-month after being flat for two consecutive months while the population was in lockdown.

No sales in Wuhan

Wuhan was especially affected by the epidemic. There were no transactions of newly built commercial houses or secondhand houses in that city in Hubei province, which had the sad distinction of being the epicentre of the coronavirus. The price of homes on sale were unchanged.

In related news, local governments away from the higher tier cities have already started implementing special bonds provisions to improve infrastructure and urbanisation.

On April 15, the Office of the People ’s Government of Zixing city in Hunan Province issued 12 “measures”, which include tax subsidies for buyers. From April 1 to December 31 this year, people who purchase new commercial housing in the center of Zixiang , who sign on time and have paid the deed tax will get a subsidy – 50% of the deed tax.

Farmers registered in the city and university students entering the city to buy a house, who complete business registration or work in a company for more than two years will be given a subsidy of 10,000 yuan per household for home purchases.

Meanwhile, Beijing Youth Daily has said that people living in “qualified shantytowns” and villages in urban areas will receive a monetary resettlement reward of 20,000 yuan per household.