It has been more than a month following the Central Government’s announcement on new home loan policy. We can take this opportunity to share some analysis on its immediate impact on Beijing’s housing market. We have observed a warmer housing market, especially for those upgrading, alongside medium-sized and large-sized housing units since early October. Nonetheless, near-term market performance will very much depend on cost of funding and mortgage availability in the city.
The warmer housing market in October was contributed by upgraders who became eligible candidates for home loans after easing in home mortgage application criteria under the new policy. Market sources estimated that there were over 20,000 housing unit transactions, a new high since March 2013. Transactions in large-sized flats such as those above 100 square meters and 120-140 square meters jumped 30% m-o-m and 20% m-o-m respectively. Average price per square meter edged up to RMB 29,000, up 0.3% over the month, which was the first sign of growth in 2014.
Meanwhile, many tenants are revising their asking prices in residential units, and their room for slashing asking prices is trimming. Nonetheless, average home prices in the secondary market have yet to become volatile, since both buyers and sellers have good discipline in home sales. Improvement in Beijing’s home sales should be seen in the second half of this year, and home sales in the fourth quarter should rebound against the previous quarter.