Feb 09, 2012
China Residential Market Watch
Q4 2011
Q4 2011
market Highlights
Regulations to remain tight, despite falls in both home sales and prices
Chart 1 Chart 1 Price trend of primary residential property (in 20 major cities)
Price trend of primary residential property (in 20 major cities)
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In the fourth quarter of 2011, new-home prices in 20 major Chinese cities dropped 2.3% quarter on quarter, adjusted by property type, location, fittings and whether they were presale or completed units. This represented the first price drop since the first quarter of 2009.
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Note: The 20 major cities include Beijing, Shanghai, Guangzhou, Shenzhen, Tianjin, Chongqing, Chengdu, Hangzhou, Wuhan, Shenyang, Nanjing, Fuzhou, Dalian, Haikou, Jinan, Taiyuan, Ningbo, Xiamen, Suzhou and Wuxi. The home prices of these cities have been adjusted to take into account differences in property type, location, fittings and whether they were presale or completed units.
We expect sentiment in China's residential market to remain weak in 2012. Increased inventory and funding pressure will force more developers to cut prices in order to promote sales, until sentiment improves.
The total transacted area of primary residential properties in 20 major Mainland cities continued to fall in the fourth quarter of 2011. Prices of new homes, adjusted by differences in property type, location, fittings and whether they were presale or completed units, fell 2.3% quarter on quarter. This represented the first drop since the first quarter of 2009. Meanwhile, late last year, the central government and a number of local governments emphasised that regulatory measures on the property market would continue throughout 2012. The primary residential market remained quiet in the fourth quarter of 2011, amid the government's home-purchase restrictions and the wait-and-see attitude adopted by potential buyers. The total transacted area of primary residential properties in 20 major cites dropped 6.4% quarter on quarter, or a significant 45.4% year on year. Only Haikou and Jinan registered year-on-year growth in total transacted area, while other cities witnessed drops of 2073%, with Shanghai, Chongqing, Hangzhou, Suzhou, Tianjin and Dalian recording falls of over 50%. Due to the decrease in sales, the inventory level in 20 major cities increased a further 14.2% quarter on quarter. If the rate of sales stays the same as in 2011, it will take at least 17 months for this inventory to be absorbed. During the fourth quarter, developers such as China Vanke (000002.SZ), Poly Real Estate (600048.SH) and Longfor Properties (0960.HK) reduced prices in some of their developments in order to retrieve capital and increase cash flow. Adjusted primary residential prices in over half of the 20 major cities showed quarter-on-quarter drops. However, only four cities (Hangzhou, Wuxi, Chongqing and Xiamen) registered price reductions compared to the same period in 2010. China's Central Economic Work Conference, an event that indicates the direction of Mainland economic policies over the coming year, was held in early December 2011. During the conference, the central government announced that it would `maintain its property-tightening policies, promote the return of home prices to reasonable levels and promote the healthy development of the property market'. Meanwhile, local governments--including Beijing, Shanghai, Guangzhou, Shenzhen, Fuzhou, Haikou and Xiamen--also announced that austerity measures, including home-purchase restrictions, would be maintained throughout 2012. We expect sentiment in China's residential market to remain weak in 2012. Increased inventory and funding pressure will force more developers to cut prices to promote sales, until sentiment
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improves. Meanwhile, the central government is expected to continue to implement tightening policies on the property market. Unless China's economy worsens or property prices fall significantly, the central government will continue to strictly regulate the property market. However, taking into account the contribution of the property industry to the local economy, some cities may fine-tune current policies to promote demand for owner-occupied homes. Furthermore, property tax may be extended to other cities from Shanghai and Chongqing, which could further regulate and promote healthy development of the market.
Chart 2 Chart 2 Adjusted price and year-on-year change in primary residential property (Q4 2011) Adjusted price and year-on-year change in primary residential property (Q4 2011) (year-on-year growth)
In the fourth quarter of 2011, most of the 20 key cities registered year-on-year price growth, except Hangzhou (-8.9%), Wuxi (-0.8%), Chongqing (-0.3%) and Xiamen (-0.3%).
Beijing Shanghai Shenzhen Ningbo Hangzhou Fuzhou Guangzhou Xiamen Tianjin Suzhou Nanjing Dalian Taiyuan Jinan Haikou Wuxi Wuhan Chongqing Shenyang Chengdu 0 5,000
20,561 (0.2%) 19,504 (3.5%) 19,155 (7.4%) 16,756 (5.6%) 16,254 (-8.9%) 14,131 (17.7%) 12,024 (15.5%) 11,222 (-0.3%) 10,301 (12.2%) 9,918 (3.8%) 9,801 (1.8%) 9,365 (13.2%) 8,444 (27.6%) 8,074 (17.9%) 7,858 (5.7%) 7,446 (-0.8%) 7,151 (11.8%) 6,586 (-0.3%) 6,395 (32.2%) 6,254 (13.3%) 10,000 15,000 20,000 25,000
Adjusted city-wide price (RMB per sq m)
Note: The home prices of these cities have been adjusted to take into account differences in property type, location, fittings and whether they were presale or completed units. Year-on-year change in brackets.
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Q4 2011
Chart 3
Chart 3 Total transacted area and year-on-year change in primary residential (Q4 2011) Total transacted area and year-on-year change in primary residential propertyproperty (Q4 2011)
During the fourth quarter of 2011, the total transacted area of new homes in 20 major cities dropped 45.4% compared to the previous year, with 18 major cities showing declines of 2073%.
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Chengdu Shenyang Wuhan Beijing Guangzhou Tianjin Shanghai Chongqing Wuxi Nanjing Dalian Jinan Hangzhou Suzhou Ningbo Shenzhen Taiyuan Xiamen Fuzhou Haikou 0 3,147.7 (-33.6%) 2,202.1 (-21.2%) 2,056.1 (-44.3%) 1,979.4 (-42.2%) 1,842.4 (-54.9%) 1,530.4 (-58.3%) 1,280.7 (-72.6%) 1,078.4 (-42.4%) 1,070.8 (-48.7%) 1,033.9 (-52.8%) 883.9 (14.6%) 863.1 (-58.1%) 826.2 (-57.4%) 632.0 (-38.5%) 631.5 (-41.7%) 559.7 (-44.5%) 549.1 (-20.0%) 302.9 (-40.9%) 300.4 (10.5%) 1,000 2,000 3,000 4,000
4,656.0 (-38.7%)
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Transacted area (thousand sq m)
Note: Year-on-year change in brackets.
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Table 1
Average per-sq-m prices of primary residential property (Q4 2011)
Among the 20 major cities, Shanghai had the highest urban-area, primary residential prices, while Shanghai, Beijing and Shenzhen had the highest city-wide prices.
City Beijing Shanghai Guangzhou Shenzhen Tianjin Chongqing Chengdu Hangzhou Wuhan Shenyang Nanjing Fuzhou Dalian Haikou Jinan Taiyuan Ningbo Xiamen Suzhou Wuxi Average
Urban area (RMB per sq m) 29,511 40,394 28,090 18,114 19,235 6,948 9,065 19,191 8,872 8,033 14,047 14,511 13,351 8,255 7,920 7,971 13,460 14,934 13,076 8,715 13,196
Suburban area (RMB per sq m) 15,878 17,563 9,644 8,594 5,623 5,363 12,518 5,949 6,113 7,985 7,974 6,233 8,858 10,729 12,139 8,123 9,031
City-wide (RMB per sq m) 20,976 21,630 12,253 18,114 10,473 6,891 6,397 14,504 7,501 6,817 10,151 14,511 10,467 8,255 7,340 7,971 11,441 13,828 12,261 8,223 11,416
Quarter-on-quarter change (%) 6.3% 3.1% 0.9% 16.3% 8.5% 3.3% 6.2% 9.4% 0.3% 3.8% 7.8% 2.8% 0.9% 0.4% 9.2% 6.5% 17.2% 2.6% 0.2% 5.5% 0.6%
Note: The average prices are unadjusted by property attributes.
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Q4 2011
Table 2
Total floor area of primary residential property available for sale (Q4 2011)
Primary residential inventory in the 20 major cities hit another record high at the end of the fourth quarter, increasing 14.2% quarter on quarter, or 41.5% year on year.
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City Beijing Shanghai Guangzhou Shenzhen Tianjin Chongqing Chengdu Hangzhou Wuhan Shenyang Nanjing Fuzhou Dalian Haikou Jinan Taiyuan Ningbo Xiamen Suzhou Wuxi Total
Available inventory (million sq m) 12.9 9.8 9.1 5.8 15.1 7.0 7.0 7.2 17.2 12.3 4.6 2.2 6.6 6.5 4.2 3.7 9.4 3.4 5.1 7.7 156.7
Quarter-on-quarter change (%) 6.5% 11.0% 28.4% 15.6% 18.8% 43.2% 16.9% 26.4% 4.5% 8.8% 2.7% 14.4% 0.7% 23.2% 1.0% 23.2% 13.7% 13.4% 26.0% 27.4% 14.2%
Year-on-year change (%) 13.2% 52.9% 47.2% 27.3% 86.9% 49.5% 65.0% 124.1% 19.4% 17.9% 35.0% 87.9% 0.3% 60.1% 7.8% 55.6% 43.1% 47.9% 83.1% 87.6% 41.5%
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Table 3
Urban and suburban areas of 20 major Chinese cities
City Beijing Shanghai Guangzhou Shenzhen Tianjin Chongqing Chengdu Hangzhou Wuhan Shenyang Nanjing Fuzhou Dalian Haikou Jinan Taiyuan Ningbo Xiamen Suzhou Wuxi Urban area Dongcheng, Chaoyang, Xicheng, Xuanwu, Fengtai, Chongwen, Haidian Shijingshan Huangpu, Luwan, Xuhui, Changning, Zhabei, Yangpu, Hongkou, Pudong New Area, Jing'an, Putuo Yuexiu, Liwan, Tianhe, Haizhu Luohu, Futian, Nanshan, Yantian, Longjiang Heping, Hedong, Hexi, Nankai, Hebei, Hongqiao Dadukou, Jiangbei, Jiulongpo, Nanan, Shapingba, Yubei, Yuzhong Jinjiang, Qingyang, Jinniu, Wuhou, Chenghua Shangcheng, Xiacheng, Xihu, Gongshu, Jiang'gan Jiang'an, Jianghan, Qiaokou, Hanyang, Wuchang, Qingshan, Hongshan Shenhe, Heping, Huanggu, Dadong, Tiexi New District Gulou, Baixia, Xuanwu, Qinhuai, Jianye, Xiaguan, Yuhuatai, Xixia Cangshan, Gulou, Ji'an, Mawei, Taijing Xigang, Zhongshan, Shahekou, Ganjingzi Longhua, Meilan, Qiongshan, Xiuying Huaiyin, Lixia, Tianqiao, Shizhong District Jiancaoping, Jinyuan, Wanbailin, Xiaodian, Xinghualing, Yingze Jiangdong, Jiangbei, Haishu, Yinzhou Siyuan, Huli, Jimei, Tong'an Cangliang, Jinchang, Pingjiang Cong'an, Beitang, Nanchang Suburban areas Fangshan, Mentougou, Tongzhou, Shunyi, Changping, Daxing, Huairou, Pinggu Baoshan, Chongming, Fengxian, Jiading, Jinshan, Minhang, Nanhui, Qingpu, Songjiang Baiyun, Songhua, Panyu, Huadu, Huangpu, Luogang, Nansha, Zengcheng Xiqing, Dongli, Jinnan, Beichen, Wuqing, Baodi Banan, Beibei, Changshou, Hechuan, Jiangjin, Wanzhou Longquanyi, Wenjiang, Qingbaijiang, Xindu, Shuangliu, Pixian Binjiang, Xiasha, Yuhang, Zhijiang Development Zone Dongxihu, Hannan, Caidian, Jiangxia, Xinzhou, Huangpi Sujiatun, Dongling, Shenbei New District, Yuhong New District Gaochun, Jingning, Lishui, Liuhe, Pukou Jinzhou, Development Zone, Lvshunkou Changqing, Gaoxin, Licheng Beilun, Zhenhai, Technology Park Haicang, Xiang'an Wuzhong, Xiangcheng, New District, Industrial Park Binhu, Huishan, Xishan, New District
Map 1 20 major cities in Mainland China
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Q4 2011
Bringing clarity to China's property market
We have access to a unique database covering the market data of 35 Mainland cities, with the potential of expanding to 100 cities.
China has the world's largest housing market, and investors--both foreign and local--have immense interest in this thriving sector. In 2011, an estimated 9.6 million new homes were sold across Mainland China. The real estate sector accounted for 20.4% of China's RMB30.2-trillion fixed asset investments last year. Meanwhile, foreign direct investment (FDI) in China's real estate sector amounted to USD24.7 billion in 2010, accounting for 16.0% of the country's total inbound FDI. Despite the importance of this sector, there is much misunderstanding about China's property market, due to a lack of consistent statistics. For example, inter-city price comparison is not always worthwhile, as some cities mix the data of subsidised housing with private housing statistics, while others do not. The fact that cities expand their boundaries and include additional suburbs in their jurisdictions at different rates has made the issue even more complex. Against this backdrop, international property consultancy Knight Frank and China-based property consultancy Holdways have formed an alliance to fill the gap in accurate statistical data and bring clarity to China's property market. We have access to a unique database covering the market data of 35 Mainland cities, with the potential of expanding to 100 cities. We are committed to applying our expertise in property research and analysis to organise and present the data in a consistent and concise way. This report covers the primary-market data of China's twenty most important cities, spanning the Bohai Rim region in the north; the Yangtze River Delta in the east; the Pearl River Delta in the south; and the western regions. To facilitate worthwhile inter-city comparison, some data, such as the average price of new home sales in the private market, have been reorganised to cover only key urban areas, with the delineation of urban and suburban districts in each city clearly stated in Table 3. Please feel free to contact us if you require more specific information about China's property market.
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About Holdways
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Contacts
Editor-in-Chief
Thomas Lam Director, Head of Research, Greater China Knight Frank
+852 2846 4819 thomas.lam@hk.knightfrank.com
Assistant Editor-in-Chief
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+86 10 8518 5758 Ext 816 jacky.wei@cn.knightfrank.com
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