APPD Market Report Article


December 1, 2021


RMB 102.7


Market demand dampened due to stricter housing policies

  • A series of housing policies, such as stricter regulation of prices, managed to cool down market sentiment. Most buyers thus adopted a wait-and-see approach. Besides, some debt-ridden developers preferred buyers who can make full payments, suppressing demand further. Overall, sales in the primary high-end residential market reached 640 units, representing a drop of about 50% q-o-q.
  • In August, the government launched reference prices for existing home sales, resulting in an instant drop in both enquiries and transactions in the secondary market. Most buyers held off on purchasing given that prices may reach their peak. Plus, as banks now provide loans based on the reference prices, which are around 30-50% lower than before, homebuyers have to make a higher down payment.

Three new projects enter the market in 3Q21

  • Totalling 595 units, three new projects were launched in the quarter; however, it was observed that some developers with strong cash flow were reluctant to enter the market. Together with the newly launched units from existing projects, 1,171 units were brought into the primary high-end market in 3Q21.
  • No projects were completed in the quarter.

Both primary and secondary capital values face downward pressure

  • In order to boost sales and improve cash flow, some developers compromised on price and rolled out special offers. As a result, primary high-end capital value fell by 1.2% q-o-q. For the secondary high-end market, many sellers maintained their prices, while some who were urgent to sell cut prices visibly, thus driving down secondary high-end capital value by 3.2% q-o-q on a chain-linked basis.
  • The leasing demand became more active in the quarter amid the peak summer rental season. Yet, overall rent only saw a mild growth of 0.8% q-o-q in view of increased supply. On a more specific note, due to the cooling of the secondary market, a portion of residential units, which were previously for sale, flowed back into the rental market.

Outlook: City’s housing market to experience stable development

  • In the next five years, the government vows to guarantee housing supply of more than 1.3 million units, nearly half of which will be public housing. Considering increasing supply, as well as tight regulations which are currently in effect, there will be less room for housing speculation and the once scorching residential market will eventually return to healthy growth.
  • Some banks have lowered mortgage rates and homebuyers can receive loan funds at a relatively faster pace compared to previous quarters. Thus, the primary high-end market may warm up to some extent, and sales are projected to reach around 2,000 units in the next 12 months. Yet, both sales and capital value in the secondary high-end market are expected to still lack growth momentum.

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

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