Second Hand House Prices: Turning Point

    “ The second-hand housing market inflection point appeared in April. First tier cities and second tier hot cities such as Hefei and Chengdu have all narrowed down compared with last month. The main reason is that the regulatory effect of hot cities continues to show, superimposed on the seasonal decline of the market, the weakening of market expectations, driving the second-hand housing market callback in April. " Xu Xiaole, chief market analyst at Shell Research Institute, said.

      On May 17, the National Bureau of statistics released the housing price data of 70 large and medium-sized cities, showing that in April this year, the price of second-hand houses in 54 cities increased month on month, and the number of second-hand houses decreased by 4 compared with the previous month. This is the first time this year that the index has declined. Among them, in addition to Hefei, Chengdu and other hot second tier cities, the second-hand house price growth of the four first tier cities also narrowed.

      Second hand housing prices are considered to be the leading indicator of the market, and the declining trend of second-hand housing prices in hot cities is considered to be caused by continuous pressure from the policy side. Since April, hot cities have taken measures to cool down the property market, including the introduction of a series of policies such as the education reform policy, which not only reversed the market expectations, but also cooled the market transactions.

Another set of data released by the Bureau of statistics on May 17 showed that in April this year, the sales area of commercial housing in China was 143 million square meters, still at the peak of the same period in recent years, but it was 23% lower than that in March.

At the end of last year, this wave of property market warming up, can this "torrent retreat"?

"The best start to history"

This round of real estate market warming began in the fourth quarter of last year. The real estate market began to heat up in the second quarter of last year after the new crown pneumonia epidemic was gradually controlled. Under the stimulation of loose monetary policy, the accumulated market demand was continuously released, and the property market finally appeared "tail end" at the end of last year.

The market rebound is so strong that the sales volume in 2020 will exceed 17 trillion yuan, a record high.

During the Spring Festival in 2021, due to the requirements of epidemic prevention and control, large and medium-sized cities have emphasized the local spring festival. In addition, the real estate enterprises continue to introduce preferential measures, so the property market in this year's Spring Festival did not excessively cool down, but the heat was better than in previous years, which also laid the tone for the "little spring" of the property market since then.

After the Spring Festival, the property market continued to heat up. According to the data of the National Bureau of statistics, from January to April this year, the sales area of commercial housing was 503.05 million square meters, an increase of 48.1% year-on-year; It is 19.5% higher than that from January to April of 2019, with an average growth of 9.3% in two years. The sales volume of commercial housing was 5360.9 billion yuan, an increase of 68.2%; It is 37.0% higher than that from January to April of 2019, with an average growth of 17.0% in two years.

Vertical comparison, which also achieved the "best start in history" of China's real estate.

Affected by the rising sales, the investment in real estate development in China from January to April this year was 4024 billion yuan, up 21.6% year on year. The investment of real estate development enterprises reached 6354.2 billion yuan, up 35.2% year on year. Among them, the growth rate of deposit, advance payment and personal mortgage loan reached 74.1% and 41.3% respectively.

Zhang Dawei, chief analyst of Zhongyuan Real estate, told reporters of the 21st century economic report that according to the current development trend of the real estate market, if there are no special factors such as repeated epidemic situation, it is expected that the annual real estate market sales of more than 18 trillion yuan will become a foregone conclusion.

But if you focus on the short term, the property market is not a smooth road, on the contrary, there are some twists and turns. Under the stimulation of seasonal warming of school district housing and other factors, since March this year, irrational warming phenomenon of property market has appeared in some areas of hot cities, which has attracted the attention of regulatory authorities. On April 8, Guangzhou, Hefei and other five cities with fast rising house prices were interviewed by the Ministry of housing and urban rural development.

Since then, hot cities continue to increase regulation, and some cities adjust education policies to cool the school district housing, and indirectly achieve the effect of cooling the property market. According to the statistics of Zhongyuan Real estate, in April this year, the frequency of the central regulatory authorities and local governments to issue property market regulation policies reached 51 times, a new high in the year. This also led to a certain decline in the property market in April.

According to the data of the National Bureau of statistics, in April, the sales area of commercial housing nationwide was 143 million square meters, down 23% month on month; The sales volume of commercial housing was 1.52 trillion yuan, down 20.8% month on month.

In April, the real estate development boom index was 101.27, slightly lower than that in March.

The impact of centralized land supply is unknown

A series of regulation and control policies have increased the price of housing. Among them, the second-hand housing prices are the most obvious in some cities under the "precision strike" of school district housing.

According to the housing price data of 70 large and medium-sized cities released by the Bureau of statistics, in April this year, the selling prices of second-hand houses in four first tier cities rose by 0.8% month on month, down 0.2 percentage points from the previous month. Among them, Beijing, Shanghai and Guangzhou rose 1.2%, 0.9% and 1.2% respectively, while Shenzhen was flat.

The second-hand housing prices in 31 second tier cities have increased, but some hot second tier cities have obviously cooled down. For example, Hefei's second-hand house price rose from 0.8% in March to 0.5%; Chengdu dropped from 0.7% to 0.3%. In Ningbo, which was interviewed by the Ministry of housing and urban rural development in early April, the rise of second-hand house prices also narrowed.

Over the same period, the average price of second-hand housing in 35 third tier cities rose by 0.3% on an average month on month basis.

The second-hand housing transaction has the characteristics of dispersion and randomness, and the expectations of buyers and sellers are easily affected by external factors. Therefore, the hot and cold transactions of second-hand housing are regarded as the leading indicators of the real estate market.

In view of the price trend of second-hand housing in April, Zhang Dawei pointed out that although most of the cities included in the statistics still had house prices rising, with the increase of regulation and control, the second-hand housing market gradually began to abate, and its path will gradually spread from first tier cities to second tier and third tier cities. Xu Xiaole also believes that under the influence of various regulatory policies, the market expectation of second-hand housing has fallen, indicating that the market turning point has appeared.

      Most analysts believe that according to the current policy strength and market trend, coupled with seasonal factors, the real estate market is expected to cool down in the middle of the year.

However, Xu Xiaole also said that since April, the transaction heat of centralized land supply in some cities in Beijing has been high, and it is necessary to be alert to the subsequent land market heat transfer to the housing trading market, which will lead to market warming.

In fact, the centralized land supply policy has affected the new housing market. In April this year, the price increases of new houses in the first tier, second tier and third tier cities all expanded. Among them, the price increase of new houses in first tier cities expanded again after narrowing in March. Institutions generally believe that this is due to the shortage of new housing supply in hot cities before the centralized supply of land, which has led to increased market expectations. Moreover, some cities have a high degree of land centralized transaction, which also brings good expectations to the market.

      But on the whole, it is difficult for the market to further warm up. It is the mainstream view of the industry to return to a rational cooling channel. According to Lu Qilin, research director of anjuke Real Estate Research Institute, the decline in the price rise of second-hand housing market will gradually spread to the new housing market in the second half of the year, thus leading to the stability of housing prices in the whole market.