Yesterday, Xinhua reported that there are now some 66,113 apartments in Beijing currently under construction are now waiting to be pre-sold, and 34,755 completed apartments are now waiting to be sold. Totally, there are 100,868 apartments waiting to be sold in Beijing according to the Beijing Branch of Centaline. This is the first time in four months that inventories reached 100,000.
This is hardly surprising of course. Under new and tougher buying restrictions in Beijing, as well as tighter credit, the pool of potential buyers are shrinking fast, yet the number of apartments waiting to be sold surge naturally because the land acquisitions spree in the past two years means that the new supply will start entering the market now.
Facing tighter credit condition and shrinking pool of potential buyers, cash flows for Chinese real estate developers are turning negative as I have previously pointed out. With declining profits, poorer cash flows, higher level of unsold inventories and higher level of debts, the question now is for how long can these developers hold the prices at high level. Sooner or later, these developers will have to cut prices and cash in.
So the overall picture now is getting obvious, that a correction in property prices is inevitable. The only question is when that will happen, and for how much.
This article originally appeared here: China Real Estate: 100,000 Apartments Waiting To Be Sold In Beijing
Also sprach Analyst – World & China Economy, Global Finance, Real Estate
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