House prices in China’s capital, Beijing, fell heavily in the September quarter, driven by a push by government regulators to curb heightened speculative activity.
According to the Caixin website, citing data from the research arm of 5I5J Group, the average price of existing homes in Beijing fell 5%, continuing the slide that began in the June quarter.
The fall corresponded with a sharp reduction in property sales which tumbled 73.7% from the same quarter a year earlier. According to survey, turnover alone fell 43.7% in the quarter to 2.06 million units based on measurements using online contracts, the lowest quarterly total since 2015.
The sharp decline in turnover and prices follows a series of measures introduced by Beijing’s municipal government to quash speculative activity in the city’s property market.
Since October last year, it has raised borrowing costs and minimum downpayment requirements for mortgages for second homes. It has also introduced requirements for non-local buyers to provide tax or social security payment records for at least 60 consecutive months and increased scrutiny on “strategic divorces” as ways to squeeze speculation out of the market, said Caixin.
“In the spirit of central government’s directive that ‘homes are for living in, not speculating on,’ the real estate market in Beijing will continue to be under tight control, thus the existing home market in Beijing is likely to remain tepid in the near term,” Hu Jinghui, vice president of 5I5J Group’s research arm, told Caixin.
The measures introduced in Beijing mirror similar efforts from authorities in other large cities to curb rapid price growth seen since the middle of 2015.
Previously limited to large tier-one cities initially, restrictions on both buyers and sellers have been rolled out across an increasing number of centres in recent months, including in smaller cities, in an attempt to limit speculators from moving from one market to another.
Selling restrictions introduced by several regional cities over the weekend saw shares in listed Chinese property developers tumble on Monday, casting doubt on the outlook for building activity in the period ahead.
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