Hot housing market gets the cold shoulder during holiday shopping season

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Some of China’s most expensive property markets have experienced an early winter chill during the first week of October, with transaction figures in major cities like Beijing and Shanghai plummeting by 70% or more compared to last year during the ‘golden week’ holiday.

Analysts cite a number of factors for the stark decline in transaction volume in these first-tier cities, such as an overall tendency to wait and observe the effects of new home rental incentives especially as prices balloon out of proportion.

During the eight-day National Day holiday, which falls on the first week of what is traditionally dubbed the “silver” month for the residential real estate sales, less than 150 new and previously owned homes changed hands in Beijing, diving around 65% and sinking to a nine-year low.

Buyers spent on average over 45,000 yuan per square meter in their homes, according to a database by Internet giant Netease. This means that an average employee in the city would need to work for more than a year to pay a bathroom measuring 3 square meters – provided they save every cent they earn.

Shanghai and Guangzhou also saw real estate sales during the period plummet to less than a fifth of their levels a year ago, to just less than 200 and 500 units respectively. Transaction volumes in other cities witnessing a property boom in the past two years, such as Nanjing and southeastern city Fuzhou, have also seen figures drop by over 30%.

The downturn comes as the nation continues to tighten restrictions on housing speculation, setting limits on the number of pieces of property an individual can purchase, requiring higher rates of down payment, as well as setting a time frame on when new homes can be sold to deter house flipping.

Tropical city Sanya, the provincial capital of Hainan and a favorite vacationing destination today rolled out the most stringent home-sales rules yet, demanding property owners hold their purchases for a minimum of five years before putting it back on the market.

“Volumes went down this year partly because a slew of stricter policies release just prior to ‘golden week ’ last year led some buyers to rush and make a purchase out of panic,” said Zhang Dawei, chief analyst at Centaline Property.

“Now, fewer entertain hopes that the regulatory reins will be loosed, and potential buyers are more rational,” he added.

Window shopping has become the trend, and prices are likely to remain stable until the middle of 2018 when it is likely prices may see a significant dip, believes Yan Yuejin, research director at E-house China.

Prices August in 70 cities across the nation slid by 0.2% on average, according to the National Bureau of statistics.