APPD Market Report Article

Beijing

December 1, 2021

0.4%

RMB 149.2

Growth
Slowing

Demand continues to be strong, supporting sales volume

  • With no new policy announcements, sales demand continued to be strong in the quarter. Buyers were attracted by the variety of new supply and stable market expectations. A total of 867 luxury apartment units were sold in the quarter, up 3.3% q-o-q.
  • Although the five-year Loan Prime Rate remained unchanged, the financial environment felt tighter as the “Two Red Lines” policy remained firmly in place. Under the strict regulatory framework, positive market sentiment is predicted to grow at a more modest pace.

After a couple of quiet months, supply peaks in September

  • After releasing adequate supply in 1H21, developers in the high-end segment paused on acquiring pre-sale certificates. However, a total of 2,192 units were launched in September, which was 17.6% lower than 2Q21, but far more than the 3Q20 figure. Under liquidity pressure, developers have had to speed up their launch pace.
  • A total of 43 centrally auctioned lands was set to be released in October. A total of 20 plots were slated for urban districts, but only a limited number of them are expected to contribute to high-end residential supply due to the strict regulatory environment.

Housing prices inch upwards; rents hold flat

  • Luxury apartment prices grew 1.6% q-o-q on a like-for-like basis, after developers ended promotions in the first half of the year. Growth was supported by steady demand as housing policies in Beijing remained unchanged.
  • Rents in the high-end leasing market were flat (rising just nominally by 0.2% q-o-q), but stayed on a positive growth trajectory due to the recovery in demand. However, recent reforms in rental policies are expected to prevent rapid and considerable increases in leasing activity.

Outlook: Sales momentum to keep strong, but ease back slightly

  • Uncertainty in liquidity may cool sales momentum to some degree towards the end of the year. However, as developers typically unleash a series of sales mechanisms to boost demand in the fourth quarter, we expect the sales volume to remain at a relatively high level through end-2021.
  • Future land supply is expected see increasingly stricter regulations to echo the tight policies intended to further curb speculation in the housing market. This is projected to support moderate and healthy price growth in the primary high-end market.

Note: Beijing Residential refers to Beijing's overall luxury and high-end residential market.

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