COVID-19 impact on China's property market is limited
By Michelle Van den Bergh
Spring is blossoming in Beijing, and people are gradually returning to work – the city is almost back to normal. But the impact of months of containment measures still remains.
In the property sector, transaction volume has been heavily hit by the lockdown in Beijing in the first quarter. Both new and pre-existing home sales dropped by some 40 percent, but prices have been relatively stable.
"The Beijing property market will be more resilient to the pandemic, compared to the rest of China. I also believe China's property market will be relatively stable," said Vincent Mo, founder and chairman of Fang Holdings, which operates a real estate portal.
Mo said China's property market is more resilient than the rest of the world because demand is still strong. "The fundamentals of the property market are still there," he said.
Like many countries that have been heavily hit by the coronavirus, China has introduced a slew of quantitative easing measures to make it cheaper for people to borrow.
Hu Jinghui, chief economist at Jinghui Thinktank, said the impact of lower interest rates on Beijing's property market is limited as it only affects a small amount of mortgage payment per month.
"Even with lower interest rates the impact on housing prices will not be large, it's more dependent on the down payment ratio," said Hu.
The down payment ratio is still high in Beijing and that is what's stopping people from buying. Lowering the down payment ratio will help boost the Beijing property market.
As for the rest of the year, many believe that housing prices will be stable in the capital city. The impact of lower interest rate and the pandemic will balance each other out and prices are likely to stay flat at least for 2020.