Beijing Housing Frenzy Driven by Schools, Property Shortage
(Beijing) — Prices of second-hand homes in Beijing are being driven up by strong demand for properties near elite primary schools and a shortage of homes for sale, according to a report by one of the city’s largest real-estate agencies.
More than 4,800 second-hand residential properties were sold in the second week of March, up 9.3% from a week earlier and close to the highest level seen in 2016, Beijing Homelink Real Estate Agency Co. Ltd., said in a report released on March 19. The average selling price per square meter was 67,600 yuan ($9,800), a 2% growth from the previous week.
The report was released days after the Beijing government announced another round of restrictive measures to try and cool a property bubble in the capital city. Prices of new homes in December were 25.9% higher than a year earlier, although the pace of gains has moderated, with the year-on-year increase down to 22.1% in February, according to data from the National Bureau of Statistics.
The latest controls include raising down-payments and suspending mortgages with a duration of more than 25 years. The city government said this week it would also increase the amount of land available for housing construction by more than its original plan for 2017 in an effort to boost the supply of new homes.
But it remains to be seen how effective the latest measures will be as prices have continued to defy curbs imposed by the city government when it started its latest round of tightening measures in September 2016.
“Homebuyers now need less time to digest new policies and their ability to accept higher prices has become stronger,” Homelink analysts said in the report.
The property agency attributed the recent frenzy to strong demand for apartments in areas around elite schools and an imbalance between supply and demand for homes.
Parents who want to enroll their child in the city’s top primary schools are moving to the districts where the schools are located, driving up home prices in those areas. In the Yuzhong Dongli neighborhood in Xicheng, in western Beijing, the price of a home near an elite primary school jumped to 150,000 yuan per square meter in March from 130,000 yuan in February, a jump of 15%, a Caixin investigation found.
Homelink also attributed the price gains to a breakdown in the supply chain. Around 70% of buyers are people who already own a property but plan to sell it to raise money for a new residence, Homelink said. But a shortage has developed because buyers are reluctant to sell their existing homes before obtaining a mortgage on their new property because of increasing uncertainty about whether they will get the loan under the tightened controls and because banks are taking longer to process mortgage applications. As a result, purchasers are holding on to their existing homes for longer, which is creating a bottleneck in the supply of housing, the agency said.
Nationwide, average new home prices in 70 major cities rose 11.8% in February from a year ago, according to Caixin calculations based on data from the National Bureau of Statistics (NBS) released last week. In the four so-called “first-tier” cities — Beijing, Shanghai, Guangzhou, Shenzhen — new home prices rose year-on-year by 22.1%, 21.1%, 23.1% and 13.5% respectively. On a month-on-month basis, the NBS data showed Beijing prices were flat.
Contact reporter Chen Na (email@example.com)
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