In China, the real estate market continues to struggle, with a significant downward pressure on the prices of second-hand houses due to high listing volumes and weak expectations. The latest data shows that in October, the prices of second-hand houses in one hundred cities experienced year-on-year and month-on-month declines, with the decline continuing to widen. The prices of second-hand houses have been falling for 42 consecutive months.
On October 31st, a report released by the China Index Research Institute revealed that in October, the average price of second-hand residential properties in one hundred cities was 13,268 yuan per square meter, a month-on-month decrease of 0.84%, expanding by 0.1 percentage points compared to the previous month. In terms of the number of cities experiencing price fluctuations, all 100 cities saw a month-on-month decline, marking the 42nd consecutive month of decline in second-hand house prices. Year-on-year, prices dropped by 7.60% compared to the same period last year, with the decline expanding by 0.22% from the previous month (7.38% decrease).
Regarding new houses, the average price of newly built residential properties in one hundred cities was 16,973 yuan per square meter, showing a month-on-month increase of 0.28%. 33 cities saw a month-on-month increase, while 60 cities witnessed a decrease and 7 cities remained stable. Year-on-year, the average price of newly built residential properties increased by 2.67% in one hundred cities.
The prices of second-hand houses are considered more indicative of the direction of the real estate market compared to new houses. New house prices are influenced by government land pricing, various taxes and fees, developer pricing strategies, and pre-sale policies, among other factors. On the other hand, second-hand house prices reflect the direct transactions between buyers and sellers based on actual property conditions in the current market environment, better reflecting market supply and demand dynamics, buyer confidence, and economic conditions.
The report also indicates that the average residential rent in 50 cities was 34.57 yuan per square meter per month, a 0.49% decrease month-on-month and a 3.63% decrease year-on-year. Two cities witnessed a month-on-month increase, while 48 cities experienced a decrease.
The China Index Research Institute stated that in terms of market performance, the prices of new houses in core cities have seen structural increases but overall remain subdued. There is still significant downward pressure on second-hand house prices, with the trend of “price for quantity” continuing. As the leasing market enters the traditional off-season, market demand has decreased to a lower level for the year, with the month-on-month decline in the average residential rent in 50 cities continuing to expand. It is worth noting that the high base effect of the fourth quarter is starting to show, with significant year-on-year declines in sales volumes of new and second-hand houses in key cities in October, indicating that the market is likely to face some pressure by the year-end.
The Hundred City Second-Hand Residential Price Index is a real estate market monitoring indicator regularly released by the China Real Estate Index System (CREIS), reflecting the monthly changes in the price levels of second-hand residential properties in 100 key cities nationwide.