35 City Total Housing Inventory Hits Record; Shanghai and Beijing Transactions At Freezing Point; Inventory Buildup Accelerated in April

A somewhat cleaned up translation of the article:

35城市库存创历史新高 京沪楼市成交坠入冰点

With the further decline of the property market turnover, inventory can not be successfully converted to cash flow and developers feel a "a mountain of pressure." In addition to increasingly tight financial chain, a sudden increase in inventory undoubtedly could trigger a new round of price cuts.

As of the end of April, according to Shanghai E-House Real Estate Institute, of the total of 35 major cities monitored, newly built commercial housing stock was 249 million square meters, mom growth of 2.6 percent, an increase of 19.5% yoy, inventory hit a record high. According to statistics, by the end of 2013, the value of the inventories of 146 listed developers exceeded 2 trillion yuan and as of the end of March this year, this figure climbed to 2.13 trillion yuan, an increase of 25% yoy.

Shanghai E-House Real Estate Institute researcher Yan leap to " First Financial Daily "reporters, under pressure on the inventory, housing prices faced by a growing number of cash-strapped risk. In some local government "bailout", while some of the high inventory of housing prices will also take the lead in "price for volume" marketing strategy.

Massive inventory pressure

Data show that 35 major cities, there are 28 cities with an increase in inventory in April. Which Nanchang, Jinan and Ningbo three cities a greater increase in inventory, an increase of 68.6%, respectively, 63.8% and 56.8% yoy; in the same period, 35 major cities new residential supply of 21.38 million square meters, an increase of 10.2% mom, [but only] an increase of 2.6% yoy. This is the highest single month increase in supply this year, indicating that the market is gradually speeding up the rhythm of bringing properties to market.

However, the developers active selling did not return a positive volume - volume of new homes in April 35 key cities of 15.03 million square meters, up 0.1% qoq, down 21.4% yoy, undigested new supply continue to "overweight" on the overburdened property inventory.

Of the city, in April, a second and third tier cities property inventory have continuing backlog. 35 cities, the total first-, second- and third tier cities in new commodity housing stock was 30.32 million, 180 million and 37.96 million square meters respectively, growth of 4.6%, 2.4%, 2.4% mom, an increase of 12.4 %, 19.2%, 27.6% yoy.

As of May 10, Beijing new residential inventory broke 70,000 units, to 70,838 units, the highest since the March 2013. As of yesterday, the Shanghai inventory of newly built commercial housing units was 65,987 units, for a total area of ​​10.26 million square meters, the inventory is also at historic levels.

In April, 35 cities in new commercial housing sales ratio was 15.2, which means the market needs 15.2 months to digest this inventory, and in March, the value was 13.9 months. Under normal circumstances, the sales ratio is greater than 12 months, house prices face greater downward pressure. It is worth mentioning that most prices firm in Beijing and Shanghai, April's sales ratio both stand on the 12 month mark, were 12.3 and 12.2 months.

Turnover falls to freezing point in Beijing & Shanghai

Behind the property inventory "mountain of pressure" is continued disappointing sales. In April, Shanghai E-House Real Estate Institute measure of 30 typical cities new commodity residential area transactions is 1266 square meters, a decrease of 4.7% mom, down 21% yoy.

"Silver April" came to nothing, traditional "Red May" also has a poor start. Centaline's 54 city data shows that this year's "May Day" holiday new residential total turnover was 236,000 square meters, a substantial decline of 47% over last year, and a four-year low.

Notably, the Beijing & Shanghai property market turnover, with its bellwether significance, both fell to near freezing.

According to 我爱我家 statistics, in early May 2014, Beijing residential houses net signed volume of 1542 units, down 52.33 percent in late April, an increase of 24.25% over the beginning of April, down 4.28 percent over last year, turnover the lowest amount of the same period of nearly four years; early May, the Beijing second-hand housing net signed volume of 1472 units, down 55.20% over the end of April, down 34.66% over the beginning of April, down 2.77% over last year.

我爱我家 vice president, Hu Jinghui believes May sluggish market turnover continued momentum, suggesting Beijing property market cooling trend this stage, buyers wait and see mood is still very strong. "In the absence of new positive message before the Beijing property market is expected to 'volume and price down' momentum will continue."

RIGHT agency executive director Huang Zhijian "First Financial Daily" reporters, said Zhou, "quantity" basis on the previous deal last week, Shanghai commercial housing turnover not have declined, continuing the "measure" deal, adding to the property market chill. More importantly, the new supply of fatigue, but also to two consecutive weeks and were less than the amount of supply volume, indicating that the developer sentiment is very serious, had a favorable deal, "Red May" or "cold as winter."

"We're still waiting to see, there is no intention to lower prices." A public housing prices secretaries told reporters that the recent visit to the sales office and many people, but buyers obviously hesitated.