According to a recent market research survey, China’s embattled property market had cooled further in the first month of 2022.
Data released by the CRIC Research Center on Feb. 1 showed that as of last month, 29 leading cities in China were seeing a year-on-year decrease of 46% in the transaction volume, which was 14.29 million Square meters.
As for the second and third-tier cities, the total transaction volume was 11.43 million square meters, down 41% month-on-month and 47% year-on-year.
An economic pundit named Chen told Radio Free Asia, RFA, that various industries in China have deteriorated in the last year. As a result, the number of unemployed people has risen, people’s purchasing power has plummeted, and a dip in residential transactions is an unavoidable reality.
According to the Middle Index Research Institute data, the price of new houses was $2515 (16,000 yuan) per square meter in January. Together with the cost of pre-owned homes, they declined for three consecutive months in more than 100 cities, including Guiyang, Kunming, Beihai, Harbin, Nanning, Nanchang, and Yantai.
Zhang, a Guangdong real estate investor, remarked in an interview with RFA that China’s house prices had been rising for many years. As a result, housing accounted for 70% of people’s investments. Now, most people want to sell their homes as soon as possible for cash because the overall economic condition is fragile, with many having difficulty finding a job.
Economist: The real estate market’s downward trajectory is unlikely to reverse in the short term
The People’s Bank of China and the China Banking and Insurance Regulatory Commission had asked banks to ease mortgages to save the real estate market last October. But after months, house buying rates remained unaffected by the moves.
Among the 103 key cities monitored in January, the first home loan interest rate was 5.56%, and the second home loan interest rate was 5.84%, both down eight basis points from the previous month. Additionally, the stimulus can speed up mortgage approvals, but this has not helped encourage house buying.
A financial expert named SiLinh told RFA that the weakening of China’s real estate market would continue this year and be similar to the decline seen last year. Since the Chinese regime stated last year that housing is not for speculation, many residences relying on this system have lost capital support. As a result, those who want to improve their living conditions will wait further for property prices to fall before actually purchasing, resulting in a challenging market decline to rebound from in the short term.
Economic pundit Chen said that people’s enthusiasm for purchasing homes has been significantly lower than predicted.
Some manufacturing businesses, such as catering, tourism, and manufacturing, are experiencing a severe downturn. As a result, many banks are closing branches and functioning cautiously. In addition, high-profile real estate corporations are in a cash crunch, spreading the trauma to small and medium-sized ones.
According to Business Insider, after real estate giant Evergrande fell into default, other prominent names such as Shenzhen-based Kaisa and Hong Kong’s Shimao, etc., had all defaulted. Those smaller Chinese developers that fell in the chain included Fantasia, Modern Land, and Sinic Holdings.
Moreover, the interest of real estate developers in land investment has dropped substantially. According to a report released by CRIC Research Center, in the third round of centralized land auctions in Shenzhen, Suzhou, Ningbo, and Wuxi, the premium rate hit a record low of 23% in January, and the unsold rate of land auctions rose to 21%.