(Yicai Global) April 10 -- With the government tightening control on the real estate market and the announcement of the establishment of the Xiongan New Area aiming to remove some 'non-capital functions' from Beijing, the property market in the capital city has come to some crossroads, a market insider told Yicai Global. Property sales volume slumped by 83 percent over China's traditional Qing Ming holiday that run from April 2 to April 4.
The Beijing local government introduced a series of regulations concerning the local real estate market within the space of two weeks between late March and early April, leading to a sharp fall in property sales.
During the Qing Ming holiday this year, 163 commercial residential properties, excluding affordable housing and owner-occupied apartments, were sold in Beijing, and the total floor area sold was 20,700 square meters, hitting a four-year low since 2013. The figures are down 82 percent and 73 percent, respectively than those recorded for the New Year's Day holiday (Dec. 31 to Jan. 2), and 83 percent and 75 percent lower compared with last year's Qing Ming holiday, indicates data provided by real estate service company, Yahao Junyuehui.
The average price of properties in Beijing came in at RMB40,016 (USD5,800) per square meter, up 39 percent year-on-year, but five percent lower than the going price during the New Year's Day holiday.
Housing Prices May Fall on Increased Supplies
Beijing will release 6,000 hectares of land into the market for property development in the next five years, of which 5,000 hectares are owned by the state, and the remaining 1,000 hectares are collectively owned, per the residential land supply plan approved by the local government on April 7. Nearly 1.5 million properties will be built during this period.
It means that 1,200 hectares of lands will be offered every year during the next five years, a substantial increase from land supply last year.
"The policies are relevant to all market participants. Government regulation now affects both the supply and demand ends, so a market downturn is inevitable," said Guo Yi, chief analyst at Yahao, noting that investors will be forced out of the Beijing market after all policy loopholes have been filled. Furthermore, strict restrictions on property purchase will effectively reduce the demand from trade-up home-buyers. New property sales will go into free fall in the near future, Guo predicts.