Commonly known as “Golden September and Silver October”, September and October are traditionally a strong season for China’s real estate developers just like Christmas is for retailers. Although the Chinese Government rolled out a series of market-cooling measures in March aiming to rein in runaway home prices, such as higher downpayment requirement, direct price and purchase restrictions and tougher capital gains tax on re-sales of second-hand property, those efforts proved futile as home prices returned to the upward trend in a span of just a few months. New home prices across the country rose for the eighth consecutive month and reached the fastest rate since 2011 at 8.3% y-o-y in August, with some major cities rising nearly double that at about 15% to 18% y-o-y, adding to evidence of a full recovery in the property market.
After being smothered by those cooling measures for a few months, home seekers are flooding back to the market as they are afraid that home prices will continue to rise. Sales in some of the country’s largest cities were booming in September. Among which in Beijing, first-hand home sales hit a four-year high during the month, totaling over 11,000 units, up 28% from August, while second-hand home sales also reached this year high at nearly 12,000 deals, up 12.4% m-o-m. Home sales in Shanghai hit a three-year high since 2011, with total transacted floor area reaching 1.2 million square meters over the month.
In southern China, sales in Shenzhen remained flat last month, but some luxury new projects priced at over RMB 50,000 per square meter saw all the units sold out in a day, pushing the average home prices in the city to a record high level of nearly RMB 29,000 per square meter. Guangzhou also saw a number of new projects located in outer suburbs such as Zengcheng, Luogang and Panyu sold out in their first day of sale. The rumor of Nansha applying for free-trade zone also sent the home prices in the district up from RMB 7,000 per square meter last year to RMB 11,000 per square meter.
Given the strong sales across the country in “Golden September”, real estate developers are now more optimistic about the sales going forward to “Silver October”. Developers are speeding up the pace of new releases during the weeklong National Day holidays. Of which Shanghai is expected to have a total of 52 new projects open for sale in October, up 30% compared with 40 projects in September. In Guangzhou, the market will have nearly 100 new projects launched during the two month period, totaling over 53,000 new flats. New home supply in Shenzhen and Beijing are also expected to increase from 10 and 32 projects in September to 39 and 46 in October, respectively.
Not only homebuyers, but also developers are on a buying spree as the recent booming home sales in major cities have quickly soaked up their inventory. Developers have been aggressive in snapping up land plots in first-tier cities since the middle of the year, with some of them selling for record-high levels. In Beijing, a 28,168 square meter site was bought by Sunac China for RMB 2.1 billion or RMB 73,000 per square meter of buildable space, marking the most expensive land price ever in China. Meanwhile, Sun Hung Kai Properties also bagged a commercial plot in Shanghai for RMB 21.8 billion or RMB 37,264 per square meter.