National Housing Rescue Window Has Closed; Bifurcation Will Intensify

The previous post looked at officials concerned the real estate recovery will be short lived. Another opinion says no national rescue is possible. Market differentiation has set in and the government will need to intervene in smaller cities to prevent a collapse in prices.

After many rounds of bailouts last year, a sharp rise in Shenzhen home prices and recovery in a few hot cities was accomplished, but it could not save the decline in numerous third- and fourth-tier cities.

"The market is more obvious gap, where the property market downturn bailout policies will be more frequent." Centaline Dawei, chief analyst, said recently the country have adjusted the amount of provident fund, the main cause is to save the city, but the inventory, and other factors to see influx , the stimulus effect on a relatively large second-tier cities, and three or four lines to cool the property market trend is still difficult to change.

State Council Development Research Center, an official told the "China Times" reporter, at present, because the line between cities, appear highly differentiated among different regions, and this trend has caused to the relevant departments of the attention, the next control on the local real estate market means will change, for overheated region, do not rule out possible government intervened again.

And for those national distribution of housing prices, because regional development is very uneven, the property market differentiation operational risks is gradually increasing.

Bifurcation is now clear even in first-tier cities. Shenzhen has tight supply, positive (young) demographics and low rates of home ownership. The gap with Beijing, Shanghai and Guangzhou is wide.

The decline of local economies is the death blow for some markets:

More importantly, the decline in the local economy to become regional market differentiation leading to "lethal" factor.

In several major cities in Northeast China as an example, from 2014, Dalian, Shenyang, Changchun and other places have appeared in the property market turnover decline, prices fell sharply situation. Analysis of the industry, the decline of the Northeast and the regional economy in Inner Mongolia influence buyers attitudes towards redevelopment properties is especially clear, leading to lack of confidence in the future buyers of the property market is expected to rise.

"2014, Dalian basic price undulating, especially customer base in the Northeast region of the high-end residential projects in great demand, but because of the economic slump, buyers began to become more sensitive to price, quality is down secondary position. "A well-known national marketing director of housing prices in the northern region, told reporters.

The bit in the middle is talking about the government's plan to renovate shantytowns. This was supposed to boost the economy and drive development and urbanization through bulldozing of old, dilapidated apartments, pushing residents into newer homes. Instead, the weak economy in many areas has effectively killed demand. As for the slowdown in the Northeast region, it was most recently covered on this blog here. Some provincial real estate investment rates are here.

iFeng: “政府救市房价齐涨”时代一去不返