The sales of new homes in the megacity of Chongqing in southwest China jumped by 64.3 per cent in March to 2.12 million square metres, according to consultancy Cric. It had recorded a cooling in its property market in the second half of 2018.
The city, with an area 74 times that of Hong Kong, recorded the sale of 31.23 million square metres of new homes last year and is China’s largest market in terms of area of residential apartments sold. It is also indicative of the overall China market, with the country’s other coastal cities generally moving ahead of the national cycle.
Chongqing’s home sales figure is now just on par with a monthly average of the past eight months and is 31 per cent off a year ago, when the market was booming, according to Cric. A similar uptick has also been recorded in the cities of Hangzhou and Xiamen, among others. Its average home price, at 11,324 yuan ($1,687) per square metre, remains flat at just a fifth that of China’s top cities.
“March is a traditionally busy season, as developers roll out more projects for sale. Sentiment has grown stronger along with a national outlook of more policy easing,” said Yuan Longyue, a Chongqing-based analyst with Cric. Yuan added that registry data lagged behind real-time transactions, which would be reflected better in April sales data.
“The city’s property market generally moves in sync with the country. When the overall market entered a boom in 2017, Chongqing did so. And when national sentiment cooled in the second half of 2018, it cooled too,” said Yuan.
Chongqing had defied the various cooling measures adopted by its municipal government during the 2017-18 upturn, but failed to escape the shift in sentiment last year.
For years, it has allowed in non-local homebuyers. An increase in prices spurred the government to impose a property tax on non-locals from the start of 2017, and by year-end it restricted the availability of mortgage loans by banks to them. This, however, failed to stem the flow of buyers from other parts of China.
The average price in Chongqing rose from 7,645 yuan per square metre in 2016 to 11,844 yuan by 2018, according to consultancy Really Info. The price of land, an indicator of developers’ appetite, soared to 5,177 yuan per square metre last year from 2,257 yuan in 2015.
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“Much like China’s stock market, Chinese homebuyers like to follow the herd,” said Yan Yuejin, research director with E-house China R&D Institute. When the outlook changed, demand also dried up, he added.
Ke Chang, an analyst with local property agency Sunto, said after the market cooled many developers lowered their prices. They also scrapped all decorations, making the discounts less visible.
China’s property market has been battered after Beijing decided in July last year to rein in growth of property prices, changing its stance from a curb on “excessive growth” previously. The subsequent cool down has, however, forced the central government into a less hawkish position – it dropped the line quietly this year and is emphasising the stability of the market.
Cric’s Yuan said the sell through rate – comparing units sold with total new units – in Chongqing had plummeted from a whooping 90 per cent in the first-half of 2018 to 60 per cent recently.
There was a decent turnout at the sales centre of Park View Mansion, a development by China Vanke in northern Chongqing, on Saturday. And the sales representatives insisted that only a handful of units were now available. Bookings for the development, which features apartments measuring 95-123 sq metres at 17,300 yuan per square metre, opened in February.
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A nearby project by three developers that are promoting low-rise apartments for 16,000 yuan per square metre, also saw many visitors. “The government will not allow prices to drop. It relies heavily on land sales revenue,” a salesperson surnamed Xiao said.
Sunto’s Ke said he believed sales volume this year would not match that of 2017-18, while prices would stabilise or drop marginally.
“The city’s home prices remain low compared with similar cities. The local wages are low and it does not draw high-flyers from elsewhere,” he said.
This article appeared in the South China Morning Post print edition as: Chongqing rebound points to rosier timesRebound may point to rosier times
