Beijing Property Market Cools Again

The real estate markets in China are localized, but the strong recovery in the first-tier cities points to the possibility of improvement in cities not suffering from excessive inventory. However, the rapidly cooling market in Beijing may signal the cautious developers were correct in their expectation that government policies would only have a temporary effect. September and October were disappointing versus optimistic expectations and the market has only cooled further in November. In the first week of the month, sales of new homes plummeted 45.4% and existing home sales cratered 37.1%. One week does not a trend make, but this comes only two weeks after the central bank's "double down" cut of interest rates and reserve requirements caused a brief jump in sales. The optimists are also hoping that "negative interest rates" will save housing, negative rates in this case meaning when the CPI is higher than the deposit rate at banks, which has historically pushed Chinese savers out of bank savings and into assets. The latest CPI was up 1.3% yoy, but the 3 month deposit rate is 1.35%. Inflation is also headed lower as producer deflation, including in agricultural goods, filters into the CPI.

If there is one bright spot, it is the average transaction price of new home sales, which increased 1.4%. The wealthier are still buying homes in Beijing.

iFeng: 年末楼市平淡 北京11月首周成交量环比降四成

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