APPD Market Report Article


February 28, 2023

Mi Yang, Head of Research, North China


RMB 148


Sales volume drops sharply due to the resurgence of COVID-19

  • As transaction activity was temporarily stalled in the quarter, luxury apartment sales fell sharply in 4Q22, down 32.7% q-o-q. However, with the support of high sales in the first three quarters, the annual sales volume in 2022 increased by 66.9% y-o-y.
  • A series of policies have been introduced to boost the residential market, including credit support and personal income tax refunds for some homebuyers. However, the market in Beijing still needs time to recover from stagnant demand. 

New supply reduced as the delivery of new projects stalls

  • Developers were hindered from launching new projects in the quarter, by a new wave of COVID-19. Luxury apartment supply declined, with a total of 2,178 new units launched, down 14.5% q-o-q. However, cumulative new supply for the year reached 9,610 units, up 5.2% y-o-y.
  • The fourth centralised land auction was finalised in November, with all 6 land plots sold. The average premium rate rose to 10.02%, a record high since the centralised land auctions began last year. The stable market performance in Beijing has attracted developers to actively acquire land.

High-end housing prices and rents continue to edge down

  • Luxury apartment prices dropped by 0.3% q-o-q. The sharp drop in sales during the quarter led to stagnant price growth. In addition, developers introduced preferential policies to boost sales near the end of the year. 
  • Due to seasonal factors and the impact of the pandemic, the leasing market was generally quiet. Rents fell slightly by 0.2% q-o-q. Faced with softer leasing demand, some landlords have expressed their willingness to make rental concessions in order to rent out apartments quickly.

Outlook: Positive policies may help the release of suppressed demand

  • Continued favourable policies sent more positive signals to the market and are expected to boost buyers’ expectations. The recovery of market activity is expected to attract buyers with a “wait-and-see” attitude. The suppressed demand during the pandemic will likely be released gradually, supporting sales volume in the first half of 2023.
  • The Beijing Urban Renewal Regulations have been passed. Due to strict avoidance of major demolition and construction works, new and sub-new houses in the core area will still be scarce. In future, a supply shortage in the primary market may drive prices to maintain an upward trend.

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

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