In mainland China, the real estate market continues to deteriorate. Sales personnel in many areas revealed that there are fewer customers buying houses, and those selling houses are facing significant losses. Sales representatives in the suburbs of Beijing mentioned that in places like Yanjiao near Beijing, some property prices have dropped by almost half. There are predictions that prices will continue to decline, possibly not reaching the bottom until after 2027 or even 2030.
Fang Li (pseudonym) is a real estate seller in the suburbs of Beijing. Last week, he told a reporter from Dajiyuan that the prices of houses in small communities in the Beijing suburbs have plummeted dramatically. “The decrease in property prices is not just a local issue, it is a common problem,” he said. Even good-quality houses that used to hold some value have seen price drops compared to last year.
“If your house is relatively scarce, it may hold up a bit, but if it lacks scarcity, it’s not valuable,” Fang Li explained. “Older houses are even less valuable; those with poor orientations are not valuable either; if you rush to sell, then…”
Fang Li revealed that in Yajiao, Hebei province, near Tongzhou, Beijing, a 78-square-meter house with a property deed is now selling for about 13,000 yuan per square meter, totaling around one million yuan for the entire unit; last year, it was selling for 16,000 yuan per square meter. “Back in 2016, during the peak, the price was 25,000 yuan per square meter, and at that time, these types of houses didn’t even have property deeds,” he added.
Data released by the National Bureau of Statistics of the People’s Republic of China on August 15th showed that in July, the selling prices of newly built residential properties in first-tier cities dropped by 4.2% year-on-year, expanding by 0.5 percentage points from the previous month. Among them, Beijing, Guangzhou, and Shenzhen fell by 3.3%, 9.9%, and 8.0%, respectively, while Shanghai rose by 4.4%. Second-tier city prices dropped by 4.8%, and third-tier city prices dropped by 5.8% compared to the previous month. Reuters estimated based on official data that in July, housing prices in 70 cities dropped by 4.9% year-on-year, increasing by 0.4%, marking the largest decline since June 2015.
Li Bin (pseudonym), a real estate salesperson in Tianjin, told Dajiyuan last week that the prevailing trend in the market is downward, with significant drops in prices in remote areas, while core areas can withstand some decreases due to supply and demand dynamics.
“Properties in remote areas are getting decimated,” he said. “Comparing to 2016 and 2017, there were no houses below 8,000 yuan per square meter in Binhai New Area in Tianjin; now the cheapest is 5,800 yuan per square meter.”
He mentioned that while properties have already dropped significantly, there may still be further declines expected, with prices potentially hitting rock bottom by 2027 or 2030.
“It’s tough all over the country because of the three-year pandemic, making it harder to make money; in addition, people don’t have money, and if you don’t have money, how can you buy? You can’t buy unless you have a specific need,” Li Bin said. Compared to before, there are indeed significantly fewer customers, with many people refraining from buying unless it’s necessary, like for education or registration, for example.
On August 30th, Reuters reported that from August 26th to 29th, a survey of 10 analysts showed that the forecast for China’s property prices in 2024 has been revised to a decline of 8.5%, up from the 5.0% predicted in May; and a projected decline of 3.9% in 2025, the same as the forecast in May.
At the end of June, Professor Yao Yang from Peking University, in an interview with Chinese media during the Summer Davos Forum, stated that a price drop of 40% is needed for the property market to correct itself.
Meng Yun (pseudonym), a real estate salesperson in Xi’an, a second-tier city in Shaanxi province, disclosed to Dajiyuan last week that one of his clients saw a property originally priced at 16,900 yuan per square meter now selling for more than 6,000 yuan less, resulting in almost a million yuan depreciation. Another second-hand property of the same client, valued around 2.8 million yuan back then, is now being sold for 2.2 million yuan, but it’s difficult to find buyers, resulting in a loss of four hundred thousand yuan.
“He has suffered losses of 1.4 to 1.5 million yuan in the past two years,” Meng Yun said.
He mentioned that back then, many citizens joined in buying houses out of excitement or being misled, and now with the sharp decline in property values, they are facing considerable losses.
On August 15th, the National Bureau of Statistics showed that in terms of existing housing, prices in second-tier cities dropped by 8.2%, expanding by 0.3 percentage points from the previous month; while in third-tier cities, prices fell by 8.1%, increasing by 0.4 percentage points from the previous month.
Xiaolin (pseudonym) is a real estate salesperson in a third-tier city. Xiaolin pointed out that in the provincial capital’s science and technology development zone, unrenovated houses are now selling for 4,700 yuan per square meter, a significantly reduced price.
“For such essential properties, this price is already very low,” Xiaolin said. “Making money is tough now, for everyone.” “Now, 800 million people are in debt, who doesn’t have debt? Right now, about a million people have been listed on credit blacklists.”
She stated that during the peak of the property market, real estate salespeople could sell many units, often working round the clock. However, in the first half of this year, she only managed to sell just over three hundred units.
Xiaolin also revealed, “Now, new properties are demolished once sold out because many lands went unsold, and there are no developers constructing houses.”
According to the latest data from CRIC, the top traditional real estate companies have significantly reduced their land acquisition scale, including central enterprises. Historical data from CRIC reveals that in 2023, in the list of land acquisition rankings, Poly Developments, Country Garden, and China Resources Land ranked in the top three, with land equity amounts of 112.5 billion, 110.1 billion, and 80.8 billion yuan respectively. However, in the first half of this year, these companies have all downsized their land acquisitions, and are no longer in the top three. Currently, their land equity amounts are much lower, with Poly Developments, Country Garden, and China Resources Land ranking in eighth, seventh, and fifth place, respectively.
On August 30th, Reuters reported that Ma Hong, a senior analyst at CRIC, stated, “The actual funding sources of real estate developers have shrunk more severely, affecting housing demand.” “I have revised my prediction for housing prices downwards compared to May because cash flow pressure on some major real estate companies will continue to increase, expanding risk exposure and putting pressure on market confidence.”
Pan Wen (pseudonym) in Shenyang, Liaoning, is also a real estate salesperson. He emphasized to Dajiyuan repeatedly, “Without demand, refrain from investing or buying houses.”
“If there’s no demand, don’t invest in buying houses, remember this, the most crucial thing is not to invest,” he said.
He pointed out that if one really needs to buy a house, they must understand any unfavorable factors around the property, such as nearby infrastructure; at the same time, assessing the quality of a property includes examining the underground parking, “If the developer only did surface work, then the basement of a bad property is usually subpar and very damp.”