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Small but encouraging signs in March existing-home market
By Cao Qian |
March 25, 2010, Thursday
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WHILE Shanghai's overall housing market has been sluggish for two consecutive months since the beginning of the year, some encouraging signs have emerged this month in the existing-home market.
These have fueled hopes in the industry that the local property market will recover in coming months if demand from end-users continues on an upward track.
The city's major estate agencies, including Centaline Property, Century 21 China Real Estate and Yungching Realty, all reported notably recovering business during the first two weeks of March. New home sales continued to be slack and supply remained at a record low.
"According to our latest research, transaction volume of existing homes at our more than 100 branches across the city in the first half of March already surpassed the whole amount sealed in February," said Huang Hetao, a research manager with Century 21 China Real Estate, operator of the city's second-largest brokerage chain.
"House-viewing trips arranged by our agents rose by an average 20 to 50 percent from the same period a month earlier and the time to conclude a purchase deal has now been halved to less than one week in most cases."
The company predicted that the city's monthly transaction volume of existing properties, mainly houses, could rebound to as many as 15,000 units in March, compared with only 5,000 units in February and a little over 10,000 units in January.
End-users, rather than investors, seem to be the major force behind the recent sales boom in the secondary market, industry people said.
"Unlike last year, when investors played an extremely important role in the real estate boom in the city, end-users will likely dominate the property market in 2010," said Chen Yujue, deputy general manager of Shanghai Centaline Property Consultants Ltd, which operates the city's largest property chain.
"Our latest research has found that existing apartments located between the city's Middle and Outer-Ring roads with a price tag of between 1.5 million yuan (US$219,708) and 2 million yuan were the most sought after types among buyers who purchase houses either for wedding or home upgrading purposes."
Across the city, districts of Baoshan, Zhabei, Putuo and Minhang remained very popular among home seekers, according to the company's statistics.
Shanghai Yungching Realty Inc, another major real estate brokerage firm, said sales of existing homes more than doubled at its branches in the first half of this month, with small- and medium-sized apartments changing hands most rapidly.
"Some end-users have already stopped waiting while investors continue to take a rather cautious 'wait-and-see' attitude as uncertainties about the market still exist," said an official with Yungching who preferred not to be quoted by name.
However, while the existing home market finally began to gain some strength after two months' setback driven by demand by end-users, it is expected to take some time for the new housing market to rebound, due to extremely low supply.
New home sales in Shanghai remained sluggish in the first two weeks of this month as real estate developers are still reluctant to launch projects at a time when prospects are unclear.
Sales of new homes, excluding those designated for relocated residents under urban redevelopment plans, totaled just 218,000 square meters between March 1 and March 14, less than 50 percent of the volume recorded during same period a year earlier. Two-week supply, meanwhile, plunged to a bit over 90,000 square meters, even less than 10 percent of those introduced during same period in 2009, according to the latest report released by Shanghai Uwin Real Estate Information Services Co.
Despite the small volume, prices continued to be unyielding above the 20,000 yuan per square meter mark. The average price of new homes stood at 20,487 yuan per square meter in Shanghai in the first 14 days of the month, compared to 19,696 yuan per square meter in February, according to Uwin statistics.
"Most real estate developers choose to shelve their sales plan at the moment as they are still not sure about how to price their products properly," said Lu Qilin, a researcher at Uwin.
"On one hand, they fear that their products may not be well accepted by the market if they set the price too high but on the other hand, they don't want to take the risk of earning less if the price is set too cheap. Releasing supply in small volumes could help test the waters for them."
The market did an about-turn over the past two-and-a-half months after a wild 2009 when housing prices nationwide soared at a record pace.
"Most developers are not likely to launch large volumes of new homes into the market until they get a clearer perspective," Lu added. "For example, whether tougher measures to curb speculation would be introduced by the central government always remains one of the uncertainties."
The market boom in 2009, characterized by record volume coupled with price surge, has created a dilemma for the government, which has been trying to stimulate the economy through looser credit but doesn't want to create bubbles that could pop and threaten growth, industry analysts said.
These have fueled hopes in the industry that the local property market will recover in coming months if demand from end-users continues on an upward track.
The city's major estate agencies, including Centaline Property, Century 21 China Real Estate and Yungching Realty, all reported notably recovering business during the first two weeks of March. New home sales continued to be slack and supply remained at a record low.
"According to our latest research, transaction volume of existing homes at our more than 100 branches across the city in the first half of March already surpassed the whole amount sealed in February," said Huang Hetao, a research manager with Century 21 China Real Estate, operator of the city's second-largest brokerage chain.
"House-viewing trips arranged by our agents rose by an average 20 to 50 percent from the same period a month earlier and the time to conclude a purchase deal has now been halved to less than one week in most cases."
The company predicted that the city's monthly transaction volume of existing properties, mainly houses, could rebound to as many as 15,000 units in March, compared with only 5,000 units in February and a little over 10,000 units in January.
End-users, rather than investors, seem to be the major force behind the recent sales boom in the secondary market, industry people said.
"Unlike last year, when investors played an extremely important role in the real estate boom in the city, end-users will likely dominate the property market in 2010," said Chen Yujue, deputy general manager of Shanghai Centaline Property Consultants Ltd, which operates the city's largest property chain.
"Our latest research has found that existing apartments located between the city's Middle and Outer-Ring roads with a price tag of between 1.5 million yuan (US$219,708) and 2 million yuan were the most sought after types among buyers who purchase houses either for wedding or home upgrading purposes."
Across the city, districts of Baoshan, Zhabei, Putuo and Minhang remained very popular among home seekers, according to the company's statistics.
Shanghai Yungching Realty Inc, another major real estate brokerage firm, said sales of existing homes more than doubled at its branches in the first half of this month, with small- and medium-sized apartments changing hands most rapidly.
"Some end-users have already stopped waiting while investors continue to take a rather cautious 'wait-and-see' attitude as uncertainties about the market still exist," said an official with Yungching who preferred not to be quoted by name.
However, while the existing home market finally began to gain some strength after two months' setback driven by demand by end-users, it is expected to take some time for the new housing market to rebound, due to extremely low supply.
New home sales in Shanghai remained sluggish in the first two weeks of this month as real estate developers are still reluctant to launch projects at a time when prospects are unclear.
Sales of new homes, excluding those designated for relocated residents under urban redevelopment plans, totaled just 218,000 square meters between March 1 and March 14, less than 50 percent of the volume recorded during same period a year earlier. Two-week supply, meanwhile, plunged to a bit over 90,000 square meters, even less than 10 percent of those introduced during same period in 2009, according to the latest report released by Shanghai Uwin Real Estate Information Services Co.
Despite the small volume, prices continued to be unyielding above the 20,000 yuan per square meter mark. The average price of new homes stood at 20,487 yuan per square meter in Shanghai in the first 14 days of the month, compared to 19,696 yuan per square meter in February, according to Uwin statistics.
"Most real estate developers choose to shelve their sales plan at the moment as they are still not sure about how to price their products properly," said Lu Qilin, a researcher at Uwin.
"On one hand, they fear that their products may not be well accepted by the market if they set the price too high but on the other hand, they don't want to take the risk of earning less if the price is set too cheap. Releasing supply in small volumes could help test the waters for them."
The market did an about-turn over the past two-and-a-half months after a wild 2009 when housing prices nationwide soared at a record pace.
"Most developers are not likely to launch large volumes of new homes into the market until they get a clearer perspective," Lu added. "For example, whether tougher measures to curb speculation would be introduced by the central government always remains one of the uncertainties."
The market boom in 2009, characterized by record volume coupled with price surge, has created a dilemma for the government, which has been trying to stimulate the economy through looser credit but doesn't want to create bubbles that could pop and threaten growth, industry analysts said.
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