More New Houses With Many In Stock, Are China’s House
Prices Near Collapse?
Mainland China has been actively
saving the real estate market.
With more new real estate properties coming in September,
and the already large housing stock, local governments lifted
limitations on house buying, even requesting banks to lower
mortgage down payments on second house purchases.
Real estate developers have had
various promotional activities.
Experts say the housing market has been facing
collapse in the past two years.
Now the government interference have made
people question their analysis.
It will be hard for the government to cover up the crisis
in the second half of this year.
Chinese real estate consulting company, Tospur, published
data showing that 35 major Chinese cities have 30,000m²
(322917ft²) in stock as of July, a 39% year on year increase.
Large and medium cities in mainland China all face
high pressure of destocking.
Looking at Beijing, Yahao Real Estate shows data that 39
projects are expected to launch in Beijing’s commodity
housing market in September, making it the highest on
record this year.
Many of the real estates properties have prepared for years
to join the market.
A reason for the high house supply in September in Beijing
is that many real estate companies failed to achieve sales
goals for the first half of the year. They have to complete
the annual sales plans.
So they are promoting more properties
and adjusting the prices.
Other cities face the same situation.
Kaisa Group and China Merchants Land Limited listed in
Hong Kong plan to promote 70% of their projects of the year.
Changsha City of Hunan Province will have 40 properties
in September, and 69% of them are new ones.
By August 27, nearly 100 real estate companies published
These show the property shares in stock increased
by over 220 billion yuan ($35.8 billion).
Local governments in China have lifted restrictions
on house purchasing.
These include Hangzhou of Zhejiang Province, Xi’an of
Shaanxi Province, Guizhou of Guoyang Province, etc.
Hangzhou government even told the local People’s Bank
to lower mortgage deposits for second house purchases.
Duan Shaoyi, Economic column writer and MBA instructor
at Beijing Normal University, “the new policy may ease the
issue a little, but can’t change the trend of the price drop.
People all know that the real estate is going to collapse.
The market prices are based on supply and demand.
When supply is more than demand,
nothing can stop the price dropping.”
Experts believe nationwide price drop will come soon.
20 to 30% slashed prices will appear.
In fact, Beijing already had properties with a 20% price
drop in the middle of August.
On August 28, state-run Xinhua published a blog article
“A Director of Housing Management Department Said
Houses Are Horribly Too Abundant!” In the article, the
director gave 3 reasons for house prices dropping.
Too many house supplies; sales slump; and many
developers quietly lowering their prices.
The director exposed that the biggest price drop
has reached 50%.
Chinese economic commentator, Niu Dao, says house
prices should have reduced down long ago.
The Chinese Communist Party (CCP) tried everything to
save the market in the past years when the prices dropped.
Such as using banks to release more money.
Niu Dao, Chinese economic commentator, “but such money
releasing doesn’t work now.
Once you release money, people will sell their houses now.
Once people get out of trouble, they’ll escape to the US.
Those who buy houses last will suffer devastating blow.
Whoever buys will lose.
The bubble is too big, and can’t be supported by a
limited purchasing power.
In the past, you could sell a house soon after you bought it,
but now it’s impossible to sell it.
No one would take it. That’s the risk.”
The Central Bank released 1.79 trillion yuan cash in January.
The broad money balance was 112.35 trillion yuan by the
end of the month.
The housing price didn’t go up, and the deposit of the month
decreased for nearly a trillion, said Chinese press.
Analysis mocks that the Central Bank told a fantasy story
with the January data.
Another 1.98 trillion yuan of deposit disappeared in July.
All kinds of real estate companies have started to use
various promotion methods.
On August 25, leading real estate company Vanke Property
cooperated with leading online shopping website Taobao.
They said all expense at Taobao can substitute for payment
of houses at Vanke Property by up to 2 million yuan.
The Chinese Central Television comments that it’s
a win-win method for both Vanke and Taobao.
However, who is going to lose?
Interview & Edit/LiuHui Post-Production/SuChan