According to Da Ji Yuan on October 3, China’s property market entered its traditional peak sales season in September and October, also known as the “Golden Nine and Silver Ten.” During this time, household consumption in the country tends to increase significantly.
But latest research data show that the sales performance of the top 100 Chinese real estate companies slumped in the first three quarters.
The outlet, citing data from China Index Academy, reported that the average sales of the top 100 Chinese housing firms from January to September plummeted 45.1% from a year ago.
The sales volume of the companies last month reached $80.4 billion (570.96 billion yuan), an increase of 10% from August and a decline of 25.4% over the same period the previous year.
As reported by Financial Associated Press, analysts think the month-on-month growth was due to the Chinese property market’s low season in both July and August. In September, the 100 firms saw weak growth from a year earlier.
Over the last three quarters, 15 real estate firms had sales exceeding $14 billion (100 billion yuan), a decrease of 12 firms from a year ago.
Meanwhile, 100 housing companies earned over $1.4 billion (10 billion yuan). This compared with 148 companies from the year before.
Da Ji Yuan noted that large real estate firms could not meet their goals in the first three quarters.
As of the end of September, Craigslist data show that most companies completed less than 60% of their targets, or even less than 50%.
Regarding second-hand home prices, China Index Academy reported that 71 cities witnessed falling prices in September year-on-year.
Among them, Tangshan had the highest drop of 7.19%. Seven cities, including Zhangjiakou and Luoyang 洛阳, declined between 5.0% and 7.0%.
Additionally, 44 cities, including Taiyuan and Yichang , shed between 1.0% and 5.0%. The remaining 19 cities, including Zhangzhou , and Jinhua , dropped by 1.0%.
Yang Bin , a Chinese economist and fund manager, told Da Ji Yuan that the main cause for the current weak property market in China is due to sky-high home prices set by property developers.
Zhu Chuanhe , a domestic real estate developer, said that the markup of China’s housing market could reach up to 100% or even 200%. Meanwhile, in other developed countries such as the U.S. and Canada, this figure is only 20%.
Yang said that some cities had implemented a price limit policy to encourage consumer spending, but Chinese households still want to wait for further price drops.
As the home prices will still fall, Yang believes that two types of entities will suffer losses from this policy. And they are the Chinese government and the institutions controlling the property market prices.
There is no fixed price in China. In first-, second-, and third-tier cities, the price per square foot can range between $40 (3,000 yuan per sq m) to as high as thousands of dollars (hundreds of thousands yuan per sq m).
Therefore, Zhu thinks the price limit policy does not help much in the long run. Real estate firms can consistently lower home prices as much as they want without hesitation, as their actual costs are way lower than the market price.
Data from the Chinese statistics bureau show that among second-tier cities, home prices of new residential buildings in 15 provincial capital cities in August fell back to a year earlier.
Harbin tumbled 7.2%, the highest among all provincial capitals. Wuhan and Lanzhou ranked second and third, down 5.3% and 5%, respectively. Taiyuan dropped 4.6% and ranked fourth.The capitals and major cities in three northeastern provinces also declined, with Shenyang falling by 4.3%, ranking fifth. Meanwhile, Dalian shed 3%, and Changchun cut 1.3%.