New Worry: Lack of Affordable Housing in Beijing

The growth of luxury housing amid rising prices has left Beijing short of affordable housing for middle class families. In Changping district, a recent property opened at 41,000 yuan /sqm, up 41 percent from the price a year earlier in that area. Another project saw prices rise 4,000 yuan/ sqm from a week earlier. In both cases, the properties quickly sold out.

Across Beijing, land prices often exceeded home prices, and teh average price of 40,000 yuan /sqm exceeds the city-wide average. Furthermore, the land sales are mainly in outlying districts with lower average home prices.

Aside from high priced land, the home price rise in Beijing this year is in part a shift towards luxury housing. Total sales volume in Beijing increased 70 percent over the first half of 2015, rising to 190.1 billion yuan. Luxury or high-end property is also selling at a 2:1 rate, with ordinary residential home sales of 10,636 in the first half, versus 24,418 of commercial/residential.

However, it is believed that some of this sales surge was a rush to beat buying restrictions. Tongzhou implemented strict buying restrictions on commercial property and rumors of similar policies has fueled periodic sales bursts since then. Developers and buyers rushed to conduct business before any regulatory change, thus the second half could see ordinary residential housing rise as a share of sales. With its lower average transaction price, the home price rise in Beijing could slow substantially or even halt. There's also concern about a lack of lower cost housing:
Centaline Dawei, chief analyst believes that the second half of the market and future risks, mainly lies in the lack of low-cost high-quality listing.

Land transaction data show that the first half of 2016, a total of Beijing to sell the 23 sites, of which two shantytowns, housing a total of seven, turnover of 20.97 billion yuan. In total 1.05 million square meters of land supply, fewer than 4 percent of residential real estate is about 387,000 square meters, which is able to become the future supply of residential real estate is only about 3,000 units. And the 3,000 suites and an average floor price of up to more than 40,000 yuan, the price is also a conservative estimate more than 70,000 yuan, almost no space in the low-cost housing.

Not only that, a lot of high-priced places are in the South Fourth Ring Road, South rings and other non-traditional luxury districts. Prices reached a luxury price, but the area is far from maturity standard luxury area, but also to bring future sales more difficult. Beiqing Bao Zhang Dawei told reporters, "the outer rings of the high king difficult market, Beijing accumulative land commercial land floor price of more than 30,000 parcels have a total of 59, which is 59 to the king of the total land transfer 191.938 billion, as of the first half, sales of only 22.48 billion, a lot of difficulty before the stock market is not the mansion traditional luxury sector is very large. "
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Zhang Dawei also notes credit policies are tightening:
In addition, credit policy for the Transaction it has always been an important promoter. Transaction fiery first half, largely due to easing of credit, loans for two suites loose, so a lot of buyers into the market demand. But this loose credit policy, the second half is unlikely to be sustained.

Dawei said that from a policy trend, the second half of 2016, Beijing will be greatly affected by the credit policy, credit policy can not continue to loose if the second half of the real estate market entered the adjustment period will be a high probability event.

The current, credit tightening has been on signs. Recently, Industrial and Commercial Bank of China on reducing commercial property, commercial housing loan ratio of market news was confirmed. It is reported that ICBC Beijing Branch has begun to implement the new loan ratio for commercial use, namely reduced from the previous 50-30%. It also means that the maximum commercial property downpayment will rise from 50% to 70%.

iFeng: 北京下半年楼市最大风险源于中低价房缺失

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