APPD Market Report Article

Beijing

November 29, 2022

Mi Yang, Head of Research, North China

-0.3%

RMB 149

Growth
Slowing

Sales in the first three quarters hit the highest in five years

  • Luxury apartment sales have dropped compared to the previous quarter, largely due to the lack of new launches that are able to achieve high sale volumes. A total of 1,709 luxury apartment units were sold, down 31% q-o-q but up 97.1% y-o-y; a quarterly high unachieved since 2013.
  • In August, the People’s Bank of China lowered the loan prime rate (LPR) for the third time in 2022. Local real estate policies have also been adjusted. Beijing implemented a differentiated monetary policy for the elderly. Frequent policy adjustments and stable sales have boosted market confidence.

New supply remains high as developers actively release new units

  • The supply of luxury apartments that came online in the quarter rose as developers rushed to launch more units ahead of the peak season. A total of 2,574 units were launched, up 14.8% q-o-q and 16.2% y-o-y. The slew of favourable policies rolled out recently have enhanced developer confidence in the market.
  • The third centralised land auction was finalised at the end of September, with all 18 land plots transacted. The average premium rate increased by 0.71 ppts q-o-q, the highest value so far in 2022, indicating that the land market has continued to heat up. State-owned enterprises were still the main driver.

High-end housing prices and rents edge down

  • Luxury apartment prices decreased slightly by 0.1% q-o-q on a like-for-like basis. This was largely due to some developers launching promotional units, as increasing sales remained their top priority.
  • Rent growth stalled in the quarter and recorded at -0.2% q-o-q. Some companies, under economic pressure, were more strict with controlling their costs. As a result, the declining leasing demand led to landlords being more flexible with their rents.

Outlook: Improved market sentiment boosts transactions

  • The implementation of the various favourable policies should gradually aid the recovery of market confidence and further enhance buyer enthusiasm. In the short term, several future projects are likely to increase market activity. The release of pent-up high-end demand is expected to further boost market recovery.
  • New supply is expected to enter the market in the following quarter to meet strong demand. With the arrival of the peak season, developers will further accelerate launches to ensure sufficient cashflow. New high-end supply is expected to remain at an elevated level.

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