Beijing Housing Market Shrinks 70 Per Cent In January
News Posted On: 28 January 2010
On Wednesday the Beijing News reported that the volume of sales for all homes transacted in Beijing fell by a dramatic 70% in the first three weeks of January as compared with month earlier.
According to the newspaper potential buyers are adopting a 'wait and see' policy while the ramifications of measures taken by the Chinese authorities to dampen speculation become more apparent.
There seems to be a prevailing view that home valuations will now correct after a runaway 2009. Indeed the prices of existing homes have already started to slip according to Beijing News, who see a switch, at least temporar ily, from a sellers' to a buyers' market.
While Beijing is not representative of China as a whole, the large drop in the number of homes sold since 2010 suggests that government measures to curb surging home prices are beginning to take effect.
Chinese home prices picked up in February last year, finally hitting an 18-month high in December.
Recent data from the National Bureau of Statistics (NBS) showed median home price rose 7.8 percent in December alone, from the previous year, averaged over China's 70 most important cities
It seems the authorities feel that housing, far from collapsing as was feared as we entered 2009, is now in danger of overheating, and have taken appropriate measures to head off rampant home price inflation at the pass.
The central government has squeezed loans, released more building land into the market, and ended tax rebates on property transactions, In addition, there is talk of interest rates being hiked on mortgages taken out on second properties.
Are the brakes now being applied too firmly to the Chinese housing market, risking another economic downturn, or 'double dip recession' – the dread term we keep hearing?
Time will tell, but if so it proves to be there seems nothing to stop the Chinese from re-introducing stimulus measures as and when they are required to kick start their housing market. Meanwhile the tectonic drift in the centre of gravity of economic activity continues inexorably eastwards.
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