APPD Market Report Article

Guangzhou

May 31, 2022

1.1%

RMB 99

Rents
Stable

Housing demand shows signs of recovery

  • The housing market in Guangzhou warmed up in the quarter as multiple banks cut mortgage rates in late February and approved loans at a much faster pace. As a result, there was pent-up demand from delayed purchases, pushing sales of the primary high-end market up by 47% to 2,254 units in the quarter.
  • The secondary high-end market has stablised after the government launched the price reference system in September 2021, but the performance varied across submarkets. Many upgraders who kept their eyes on high-quality products in CBD eventually made the purchasing decision. Thus, transactions volume recorded a bounce in ZJNT in 1Q22, whereas that of other submarkets remained stagnant.

Three new projects are launched in 1Q22

  • New supply dropped visibly in the quarter, with a total of 985 units. Among them, around 500 units came from three new projects in urban areas, namely Richmond Greenville and The Peak View in Tianhe, and Harbour City in Liwan, while the rest were from existing projects.
  • Two projects namely The Skyline and Jadeite were completed, adding 273 units to the total stock of Guangzhou’s high-end residential market.

Secondary high-end prices are stable despite increased sales

  • As home buyers have started to return, developers offered fewer discounts in general, while some raised selling prices slightly. Thus, the primary high-end capital value increased by 1.5% q-o-q. As for the secondary high-end capital value, it edged up by 0.2% q-o-q as prices held firm in ZJNT.
  • There was a moderate pick-up in leasing momentum after the Chinese New Year. Yet, mainly due to the supply-demand balance, many landlords kept their rents unchanged, and the minor increase of 0.6% q-o-q in overall rent was driven by ZJNT’s units recording more enquiries.

Outlook: Easier monetary policies to support housing demand

  • In the short term, lowering mortgage rates further is expected to become a trend to restore market confidence. Sales in both primary and secondary high-end markets will therefore increase moderately. In particular, the launch of several new projects in Tianhe will attract more buyers to enter the market.
  • Due to continued price caps, primary high-end capital value is expected to be stable with a mild increase. Regarding the secondary high-end capital value, divergent performance is expected. Submarkets, such as ZJNT and Tianhe North, will likely resume their growth momentum, while others remain under pressure given the existing price gap.

Note: Guangzhou Residential refers to Guangzhou's luxury residential market.

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