Reduced sales, rising inventory, and falling home prices were the key
characteristics of the Chinese residential property market in 2014, according to
a blue paper published by the Chinese Academy of Social Sciences (CASS) on
Thursday.
The blue paper projected that the housing market in 2015 will be generally better off but prices are unlikely to rise substantially.
Experts say these changes reflected a correction in China's property market but things will gradually look better with policies by the central and local governments in large cities.
The CASS report showed that last year over 12.1 trillion square meters of commercial residential property were sold nationwide, down 7.6 percent from that of 2013, while unsold property totaled a record high of 6.22 trillion square meters, news portal chinanews.com reported on Thursday, citing the blue paper.
Home prices also fell from the 2013 level and out of the 70 large- and medium-sized cities, 68 saw a year-on-year decline in home prices in 2014, read the report.
Property investment in 2014 was 9.5 trillion yuan ($1.53 trillion), marking the slowest growth since 1998, and the volume of mortgage loans started decreasing from the second quarter in 2014, the report said.
Local governments are increasingly issuing new local loosening policies that are replacing a one-size-fits-all policy issued by the central government, the blue paper said.
To rein in the previously red-hot property market, cities began to implement housing purchase limits from April 2010. Over 40 cities rolled out restricting policies but most of the cities then loosened them from 2014.
Li Jiangyi, a researcher with Chengdu-based Survey and Research Center for China Household Finance, said a survey conducted by his institution showed home buyer sentiment weakened in 2014.
Li's institution conducted a survey of people's home purchase willingness from a poll of 28,000 households on a quarterly basis.
"The average consumer believed that housing prices would grow higher quarter-on-quarter for all four quarters of 2014, but the survey conducted in the first quarter this year showed that people have begun to believe the price will drop," Li told the Global Times on Thursday.
The survey also found that those who have more than one apartment have begun to believe home prices will drop which could lead them to sell their assets soon, and this will weigh on home prices, Li said.
The weakening confidence was coupled with a growing opportunism in the Chinese stock market, which has gone on a bullish run since the second quarter of 2014, Li said.
"The high inventory can be seen as a legacy of fast expansion in recent years when the housing market was good. 2013 was a good year, and nobody expected 2014 to be a bad year. Many property developers' risk management capability is inadequate," Chang Qing, a researcher from real estate agency Homelink, told the Global Times on Thursday.
Chang said a one-size-fits-all policy to curb housing purchases fails to reflect regional differences.
"A one-size-fits-all policy cools down the overheated first-tier markets, but crushes second- and third-tier cities' markets," Chang said.
"After a few cities began to roll out their own policies, more second- and third-tier cities followed in order to support their local property sectors.
The central government does not object to these measures, because the property industry is a pillar industry for China, and the ultimate goal is the market's steady development," Chang noted.
To help prevent the industry from losing steam, supportive policies such as bigger tax breaks and a cut in the down-payment requirement were rolled out by the central government in March.
The correction was also shown in the performance of Chinese property developers, many of which believe the housing market is cooling down and are preparing to venture into other sectors or overseas.
Leading property developer Vanke said in its annual report released in March that its core profit for 2014 rose by a lower-than-expected 4.2 percent as a slowing property sector hurt margins across the sector. Vanke said its core profit in 2014 was 15.75 billion yuan ($2.5 billion), compared with a Reuters analyst forecast of 17.6 billion yuan.
Evergrande Real Estate Group Ltd said its core profit for 2014 rose 16.5 percent to 12 billion yuan, helped by record sales and an increase in completed projects, according to the company's annual report in March. The company said it would speed up non-property investments this year, including in dairy, food and drinking water.
First-tier cities such as Shenzhen, Shanghai and Beijing have showed evident signs of recovery since March in terms of turnover and market sentiment, but more time is needed to see whether the recovery is substantial, Chang said.
The blue paper projected that the housing market in 2015 will be generally better off but prices are unlikely to rise substantially.
Experts say these changes reflected a correction in China's property market but things will gradually look better with policies by the central and local governments in large cities.
The CASS report showed that last year over 12.1 trillion square meters of commercial residential property were sold nationwide, down 7.6 percent from that of 2013, while unsold property totaled a record high of 6.22 trillion square meters, news portal chinanews.com reported on Thursday, citing the blue paper.
Home prices also fell from the 2013 level and out of the 70 large- and medium-sized cities, 68 saw a year-on-year decline in home prices in 2014, read the report.
Property investment in 2014 was 9.5 trillion yuan ($1.53 trillion), marking the slowest growth since 1998, and the volume of mortgage loans started decreasing from the second quarter in 2014, the report said.
Local governments are increasingly issuing new local loosening policies that are replacing a one-size-fits-all policy issued by the central government, the blue paper said.
To rein in the previously red-hot property market, cities began to implement housing purchase limits from April 2010. Over 40 cities rolled out restricting policies but most of the cities then loosened them from 2014.
Li Jiangyi, a researcher with Chengdu-based Survey and Research Center for China Household Finance, said a survey conducted by his institution showed home buyer sentiment weakened in 2014.
Li's institution conducted a survey of people's home purchase willingness from a poll of 28,000 households on a quarterly basis.
"The average consumer believed that housing prices would grow higher quarter-on-quarter for all four quarters of 2014, but the survey conducted in the first quarter this year showed that people have begun to believe the price will drop," Li told the Global Times on Thursday.
The survey also found that those who have more than one apartment have begun to believe home prices will drop which could lead them to sell their assets soon, and this will weigh on home prices, Li said.
The weakening confidence was coupled with a growing opportunism in the Chinese stock market, which has gone on a bullish run since the second quarter of 2014, Li said.
"The high inventory can be seen as a legacy of fast expansion in recent years when the housing market was good. 2013 was a good year, and nobody expected 2014 to be a bad year. Many property developers' risk management capability is inadequate," Chang Qing, a researcher from real estate agency Homelink, told the Global Times on Thursday.
Chang said a one-size-fits-all policy to curb housing purchases fails to reflect regional differences.
"A one-size-fits-all policy cools down the overheated first-tier markets, but crushes second- and third-tier cities' markets," Chang said.
"After a few cities began to roll out their own policies, more second- and third-tier cities followed in order to support their local property sectors.
The central government does not object to these measures, because the property industry is a pillar industry for China, and the ultimate goal is the market's steady development," Chang noted.
To help prevent the industry from losing steam, supportive policies such as bigger tax breaks and a cut in the down-payment requirement were rolled out by the central government in March.
The correction was also shown in the performance of Chinese property developers, many of which believe the housing market is cooling down and are preparing to venture into other sectors or overseas.
Leading property developer Vanke said in its annual report released in March that its core profit for 2014 rose by a lower-than-expected 4.2 percent as a slowing property sector hurt margins across the sector. Vanke said its core profit in 2014 was 15.75 billion yuan ($2.5 billion), compared with a Reuters analyst forecast of 17.6 billion yuan.
Evergrande Real Estate Group Ltd said its core profit for 2014 rose 16.5 percent to 12 billion yuan, helped by record sales and an increase in completed projects, according to the company's annual report in March. The company said it would speed up non-property investments this year, including in dairy, food and drinking water.
First-tier cities such as Shenzhen, Shanghai and Beijing have showed evident signs of recovery since March in terms of turnover and market sentiment, but more time is needed to see whether the recovery is substantial, Chang said.
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