APPD Market Report Article


February 28, 2022


RMB 103


Market demand increases amid improved market sentiment

  • Market sentiment warmed up in the quarter, largely attributable to the easing of mortgage loans. Two newly launched high end projects in urban areas both achieved a satisfactory sales performance, with one selling all of its units in the pre-sale stage. Plus, existing projects in suburban areas also saw better sales supported by the promotional offers rolled out at year end.
  • An uptick in transaction volume was observed in the secondary high end residential market and most of the transactions were from Zhujiang New Town and Tianhe North. A small portion of buyers who took a wait-and-see approach previously eventually made the purchasing decisions given that the residential market has continued to stabilise.

Two new projects are launched in 4Q21

  • Developers were active in pushing new projects for sale this quarter, with a total of 2,662 primary high end units, representing a quarterly record high since 4Q09. Among them, 1,040 units came from two new projects in urban areas, namely Xiguan Mansion and Haizhu Tangim.
  • Three projects, namely Above the Clouds, The One, and The Upper House, were completed this quarter. Together with the units from partially completed projects, a total of 774 units were added to the total stock in 4Q21.

Both primary and secondary high-end prices continue to drop

  • A few projects in suburban areas offered discounts ranging from 5-10% to boost sales and to relieve the cash flow pressure. Thus, overall primary high end capital value saw a decline of 2.5% q-o-q. For the secondary market, some landlords softened their stances further in order to close deals. Overall, secondary high end capital value continued to drop but by a slower pace at -2.3% q-o-q.
  • The leasing demand was relatively muted this quarter due to the slowdown in business activities and recruiting process. In order to fill the vacant properties before the Spring Festival, some landlords were willing to compromise on rents, thus resulting in a mild decrease of 0.2% q-o-q in overall rent.

Outlook: Lower borrowing costs to help restore market confidence

  • The easier monetary policy to prop up the residential sector may raise buyers’ expectations. Both first-time homebuyers and upgraders who have genuine demand for homes are expected to return to the market. As a result, pent-up demand may be gradually released in the short term, promoting a healthier development of the Guangzhou residential market.
  • Although a potential pick-up in sales is expected, capital values will still face headwinds due to the influx of new supply and the reference price mechanism. It is expected that primary high end capital values may hover at the current level, while the decline in the secondary high end capital value is likely to narrow in the short term.

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

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