[Epoch Times November 08, 2021](The Epoch Times reporter Zhang Tianyu interviewed and reported) The mainland’s second-hand housing market ushered in a cold winter. In October, the second-hand housing transaction volume in 13 key cities fell by more than 40% year-on-year, and Beijing reduced it by 53.4%. Second-hand house prices also generally fell. According to Lu Media, it was caused by the CCP’s multiple “limit-limit” regulatory policies, but then “limit-limit orders” were issued in many places. The analysis believes that the mainland property market has been in a dilemma and faces the risk of collapse regardless of the rise or fall.
Second-hand housing transaction volume plummeted, the first-line property market was cold
According to the monitoring data released by the Shanghai E-House Real Estate Research Institute a few days ago, in October 2021, the transaction volume of second-hand housing in 13 hot cities in mainland China was about 36,000 units, a decrease of 14,000 units from the previous month and a decrease of 26.9% from the previous month. Compared with the same period last year, it dropped by 42.8%.
As of the end of the month, the total volume of second-hand housing transactions has basically fallen back to 7 years ago. This shows that since 2015, the strong rise in the second-hand housing market has been broken.
North, Shanghai, Guangzhou, and Shenzhen have always been the “wind vanes” of the mainland property market. This year, second-hand housing has been cold, and first-tier cities have not been spared, making the “Golden Nine and Silver Ten” a bleak end.
Beijing’s second-hand housing transaction volume fell below 10,000 units for the first time this year. According to data from the Centaline Real Estate Research Center, Beijing’s October second-hand housing online signed 9,340 units, down 53.4% year-on-year (compared to the same period last year), and down 25.7% month-on-month (compared to last month). This is the seventh consecutive month that the transaction price of Beijing’s second-hand housing market has fallen.
In Shenzhen, the number of second-hand housing online signings in October was only 1,605, a record low in the past 10 years.
According to data from the Guangzhou Association of Real Estate Agents, in October, Guangzhou second-hand housing network signed 5253 sets, down about 15% from the previous month, and down nearly 51% from the same period last year.
Shanghai’s October second-hand online signing data has not yet been announced, but the September data shows that the transaction volume of second-hand housing is 12,040 units, down 33% from the previous month.
Second-hand housing prices generally fell
On November 1, the China Real Estate Index System released the “Price Index of Hundred Cities”, showing that in October 2021, the average price of second-hand houses in 100 cities in the mainland was 16,026 yuan/square meter, a decrease of 0.04% from the previous month. This is the first time the index has fallen since its release in June 2020.
Among the 100 cities surveyed, 59 cities have experienced a month-on-month decline in the price of second-hand housing, the highest number during the year.
Previously, the National Bureau of Statistics of the Communist Party of China announced the changes in the sales prices of commercial housing in 70 large and medium-sized cities in September 2021. Among the 70 cities, 52 cities have seen their housing prices go down, and only 18 cities have seen a steady or slight increase in housing prices.
The CCP’s “two-way regulation” is afraid of rising and falling
For the cold in the mainland second-hand housing market, Professor Xie Tian from the University of South Carolina Business School believes that the main reason is that the mainland’s housing supply exceeds demand and the buyers have become more rational.
Professor Xie Tian said: “Firstly, the demand of the Chinese people has declined and their confidence has also declined. The buyers have changed from being fanatical to being disinterested and even pessimistic about the prospects of China’s real estate market, believing that real estate prices will fall.”
According to Lu Media’s analysis, there are three reasons: First, the credit environment is tightening, and the approval of mortgages in many places has become stricter. 2. Many governments have issued the “Guide Price for Second-hand Housing”, requiring intermediaries to remove all listings above the “Guide Price”. 3. Intensive “control policies” such as “upgrading purchase restrictions” were introduced.
What caused controversy was that when mainland housing prices began to fall, many cities successively issued “restriction orders”, for example, requiring that the decline should not exceed 15%. And this kind of “limiting up” and “limiting down” scenes appearing at the same time is called “two-way regulation.”
Xie Tian believes that, on the one hand, the CCP is worried about overheating of the real estate market, rising housing prices, excessive credit, and huge risks for lending institutions and banks. Therefore, it has tightened credit in an attempt to cool the property market. But on the other hand, I am worried that the real estate market will be cold and house prices will fall, which will damage our own interests. Therefore, there is such a contradictory “two-way control policy.”
Xie Tian said: “The CCP’s’decision limit order’ is to prevent the real estate market from falling and crashing. Because the real situation in China’s real estate market is oversupply and oversupply, a large number of real estate companies are facing financial crisis. In order to repay bank loans, The eagerness to sell unsold properties in their hands will inevitably lead to substantial price cuts. It is likely to cause the real estate bubble to burst and the property market to collapse. This is not what the CCP wants to see, because a large number of the CCP’s powerful assets are in the real estate market.”
Xie Tian pointed out that the dilemma for the CCP is that if housing prices are prevented from falling and real estate companies cannot sell their houses, they will go bankrupt due to their inability to repay loans and debts, which will detonate bad bank debts and trigger a credit crisis.
According to officials from the China Banking Regulatory Commission, China’s real estate-related loans currently account for 39% of banking loans.
However, mainland real estate companies have experienced large-scale bankruptcies due to debts. According to incomplete statistics, since this year, as of September, on average, one real estate company has gone bankrupt every day.
Xie Tian believes that the mainland property market has entered a dead end. Whether it continues to rise or fall, it may trigger a financial crisis. Therefore, the introduction of the so-called “second-hand housing guidance price”, trying to limit the housing prices within their control.
Xie Tian said: “If the CCP really considers people without housing, it should open up the market and let the market’s regulation mechanism work to determine housing prices, instead of continuing to control housing prices.”
Editor in charge: Sun Yun#
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