(Yicai Global) July 19 -- The average price of second-hand homes in the four Chinese first-tier cities logged the biggest monthly decline in June since September 2014, as buyers adopt a wait-and-see attitude, leading to a large inventory of unsold properties.

The price of a pre-owned home in Beijing, Shanghai, Guangzhou and Shenzhen dipped 0.7 percent in June from May, and 0.4 percent from a year earlier, according to the National Bureau of Statistics. It is the first time there has been a year on year drop since August 2019.

Many investors bought houses in first-tier cities when the prices were high and the market was booming, Li Yujia, chief researcher at the Guangdong Urban and Rural Planning and Design Institute’s Housing Policy Research Center, told Yicai Global. However, now that sales are sluggish, these speculators are selling their properties at lower prices.

There has not been much improvement in the housing market this month, and only properties that are heavily discounted are selling well, a real estate agent told Yicai Global.

“Unless you are in a hurry to buy a house, why not shop around and compare prices? I won’t even try to convince you otherwise,” he added.

A Beijing apartment owner listed his 27-year-old home for CNY7 million (USD971,170) six months ago based on the market value of similar properties in the area. However, he has not been able to find a buyer, and has now trimmed the asking price by almost CNY1 million (USD138,000) to CNY6.08 million.

“We initially listed the property at slightly above market price, but no buyers were interested,” the real estate agent told Yicai Global. As more pre-owned homes flood the market, buyers have become more selective and sellers have had to lower their expectations.

In Shanghai, newly built apartments were selling well in the first half, although the second-hand market did slightly less well due to a supply glut, a third real estate agent said. Most transactions were for old houses over 20 years old, or for properties that the owners needed to sell quickly.

A house that a person living in Guangzhou put on the market at the start of the year remains unsold. Without selling it, he does not have enough funds to buy a new one.

The rise in the supply of long-term rental housing by local governments has caused some people to rent instead of buying, which has also affected the second-hand housing market, Li said.

In the first quarter, the real estate market surged as a lot of demand that built up during the pandemic was released, Li said. This pent-up demand has now been spent and the pre-owned housing market slumped in the second quarter. There will be a slight uptick in the third quarter, but not enough to effect a significant recovery as there is only limited policy support and market expectations are weakening.

Editor: Kim Taylor