Quarters Presale

Sales of new Mainland homes decline despite increased supply

According to the latest report jointly released by Knight Frank and Holdways, the supply of new homes in ten major Mainland cities increased month on month in April. However, sales did not follow this uptrend, with most cities recording month-on-month declines in the total areas of new homes sold. Meanwhile, new home prices—adjusted by differences in property type, location, fittings and whether they were presale or completed units—gained 4.6% month on month, as developers did not reduce prices to promote sales.

 

With the resumption of supply in the second quarter, the total area of new homes launched in the ten cities rose 38.3% in April. The most significant jumps were registered in Shenzhen (468.4%), Hangzhou (123.8%) and Chengdu (101.4%), where the figures surged by over 100%.

 

However, the Mainland residential market remained depressed in April, witnessing falls in the volumes of new-home sales in all the ten cities, year on year. Tianjin (-81.6%) experienced the biggest decline, while Beijing, Chengdu, Hangzhou and Wuhan also recorded notable drops of over 50%. Month on month, declines in the volumes of new-home sales were registered in most cities, with the most prominent drop seen in Tianjin (-55.3%), followed by Wuhan (-29.9%) and Shenzhen (-28.9%). Most cities’ adjusted new-home prices remained stable or showed month-on-month gains, with price growth in Shenzhen (17.0%), Guangzhou (12.1%) and Beijing (8.8%) being the most notable.

 

In April, the central government and related authorities restated that the implementation of the tightening policies would not be loosened and urged the acceleration of the construction of subsidised housing. In order to suppress inflation on the Mainland, the central government implemented a series of credit-tightening policies. Not only do the policies further restrict the financing of developers, but also increase the burden of homebuyers and strengthen the wait-and-see atmosphere in the market.

 

In view of the central government’s determination to control residential prices on the Mainland, Knight Frank and Holdways believe that only considerable price drops will revive sales volumes. However, in the short term, financial pressure faced by developers will not be significant enough to prompt sharp price cuts. New home prices are expected to remain stable with marginal corrections during the second quarter of 2011.

About the Author

Knight Frank

Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank and its New York-based global partner, Newmark Knight Frank, operate from 209 offices, in 47 countries, across six continents.  More than 6,840 professionals handle in excess of US$755 billion worth of commercial, agricultural and residential real estate annually, advising clients ranging from individual owners and buyers to major developers, investors and corporate tenants.

Knight Frank has a strong presence in the Greater China property markets, with offices in Hong Kong, Beijing, Shanghai, Guangzhou and Macau, offering high-quality professional advice and solutions across a comprehensive portfolio of property services. For further information about the Company, please visit KnightFrank.com.hk.

 

Holdways

Beijing Holdways Information & Technology Co Ltd (hereinafter referred to as Holdways), founded by the China National Real Estate Development Group Corporation, was one of the first property information and consultancy service providers in China.

 

With comprehensive property and finance databases and strong market research and analytical power and staffed by qualified and experienced professionals, Holdways provides real estate intelligence, market research, competitor analysis and strategic consultancy services to both domestic and international companies.

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