Potential for Sustained Demand in Shenyang
As a result of the municipal
government's expansionary monetary
measures, Shenyang's property market
experienced a steady recovery.
Total residential transactions in 2009
increased by about 60.1% to
15.4 million sm while average prices
amounted to US$512 (RMB3,493)
psm, chalking an increase of about
1.7% compared with 2008.
Underpinning Shenyang's strong
residential demand are sound economic
fundamentals and rapid urbanisation.
Demand for replacement housing is
also expected to grow within the next
two years as the municipal government
has announced plans to set aside
US$8.79 billion (RMB60 billion) to
relocate about 132,000 households
in the old city area.
Thriving Suburban Districts in Beijing
The expansionary monetary policy
and property support measures
introduced in late 2008 led to a strong
rebound in the Beijing property market.
Total residential sales volume in 2009
was 18.8 million sm, an 82% increase
from 2008. The average transacted
price of residential housing rose above
the previous peak recorded in August
2008 of US$2,060 (RMB14,070) psm,
registering a 76% increase from
US$1,529 (RMB10,438) psm in January
2009 to US$2,695 (RMB18,401) psm
in December 2009.
In addition, Beijing's emerging
suburban districts are expected to
continue growing due to a rapidly
expanding population, improving
infrastructure and transport links.
Resilient Chengdu's Property Market
The property market in Chengdu
was hit comparatively harder than
other Chinese cities as it dealt with
the double blows of the financial
crisis as well as the aftermath of the
Sichuan earthquake in 2008. However,
with government stimulus measures
and the revitalisation of western China,
Chengdu's markets have rallied
strongly and there was a marked
improvement in residential
sales volume.
Residential transaction volume for 2009
totalled 25.3 million sm, exceeding the
take-up in 2008 by 112.5%. Chengdu's
property market seem to have bottomed
out, with average residential prices for
the city's five main districts rising to
US$1,085 (RMB7,414) psm for 2009,
which is a 42% increase from 2008,
and higher than the previous peak in
2007. Since the economy turned the
corner in early 2009, Chengdu is
expecting sustained growth into 2010,
supported by positive market sentiments
and strong economic fundamentals.
Changzhou Shows Good Growth Potential
Property prices are more stable and
controlled in second-tier cities such as
Changzhou. Its property market for 2009
has recovered together with China's
rebounding economy, with average
transacted prices increasing by 7.3%
from US$600 (RMB4,095) psm in 2008
to US$644 (RMB4,395) psm in 2009.
This rate of increase has held steady
since 2007 and a lack of drastic price
fluctuations should bolster investors'
and homebuyers' confidence.
With a strong manufacturing base and
healthy growth potential, sustained
demand is expected to extend into 2010.
Pent-up Demand Absorbs Supply in Jiangyin
Following China's rapid recovery from
the financial tsunami of 2008, Jiangyin's
residential market promptly followed suit
and sales transactions in 2009 quickly
absorbed the excess stock from 2008.
By December 2009, demand outstripped
supply as 17,034 units were transacted
with only 13,790 units issued with sales
permits. On average, 1,420 units were
sold per month in 2009, higher than the
2008 average of 920 units. Average prices
of middle-upper class apartments have
climbed from US$1,080 (RMB7,370) psm
in January to US$1,245 (RMB8,500) psm
in December, which is an increase of 15%
for the year. With sustained healthy
demand, Jiangyin's property market is
expected to remain upbeat in 2010.
Flurry of Activity in Kunming
Following a relatively short decline in
the first quarter of 2009, Kunming's
property sector embarked on an upward
climb with increases in prices and
residential transaction volume. There
was also strong demand experienced in
the government land sales programme,
which saw land auction prices increased
by 20 to 30% compared to 2008.
The volume of new residential
transactions for 2009 reached 56,000
units, and registered a 143% increase
over the 23,000 units taken up in 2008.
Average residential unit price reached
US$810 (RMB5,533) psm, growing by
6% compared to 2008.
Developers who had previously scaled
down or held back their projects rolled
out new launches from the middle of
2009. While demand is expected to
continue to grow at a strong pace in
2010, new government measures
aimed at moderating growth will likely
help prevent overheating of the market.
Source: Economist Intelligence Unit
|
In Focus: Is China's Property Market Headed for a Tumble?
Concerns of a property bubble in
China has been a hot topic in the
media and social arenas, spawning
TV shows and Internet discussion.
Since property prices and sales
volumes blazed a fiery path in 2009,
the central government has made good
on their pledge to prevent the property
market from becoming overheated by
tightening credit conditions, imposing
sales taxes and stringent enforcement
of increased down-payment ratios,
sparking some fear that the Chinese
property market may be headed for
a downward spiral in 2010.
To pre-empt the emergence of an
asset bubble, the central government
is on the right track with its cooling
measures, which are carefully
calibrated as the property sector is
a key pillar of the Chinese economy,
contributing over 10% to its GDP. By
ensuring a steady stream of affordable
housing supply, analysts believe that
the government is merely aiming to
lower residential prices in the short
term and prevent over-speculation to
allow its growing middle-class the
ability to afford property.
With sound fundamentals such
as strong economic growth, rising
household income and better than
expected employment figures
underpinning China's economy,
fears of a plunge in the residential
market seem largely unfounded.
Per capita disposable income of
urban residents increased by 9.8% to
US$2,515 (RMB17,175) and 9.1 million
people were newly employed in urban
areas in 2009.
Furthermore, China's one-child
policy has the unintended outcome
of enhancing the ability of many
homebuyers to pay for their
apartments with help from parents
and grandparents pooling their
savings to fund purchases. While
prices and residential transactions
may dampen slightly in the short
term, a gradual moderation of the
market and a corresponding
uptrend at a manageable pace
are likely outcomes.
|
|
