When will the China housing market bottom out?July 10, 2011 / By Joe Zhou
Among the cities in China that we monitor closely, the majority reported a significant decline in housing sales volume in the first half of 2011 due to government tightening measures. However, according to the data provided by China Real Estate Information Corporation (CRIC), sales revenues of the top 10 developers grew 80% y-o-y to RMB 332.3 billion in 1H11, with their combined market share growing from an estimated 12% last year to 15% in the first half of this year.
Why did the top 10 developers outperform their peers? There are many reasons, including better marketing, better branding, stronger execution, broader geographic coverage, etc. A key factor is that with sales momentum slowing, big players reacted quickly and offered buyers price discounts to spur sales while smaller peers still held prices steady because they strongly believed they would be able to weather the storm.
Will we see more developers cutting their sales prices in the second half of the year? All the evidence suggests that the government will continue to tightly control funding channels for developers. Although the financial situation is not uniform from one developer to the other, inventories piling up and consequently pressure on cash flow building up is likely to lead more developers to cut their prices in exchange for a higher sales volume in the months ahead. With the price cuts, owner occupiers trying to time their purchases will be presented with a window of opportunity to buy. With sales likely to gradually recover, China’s housing market is currently approaching its bottom.
More on 'Residential' in 'China'
- Shanghai’s rental housing sector in the spotlightFebruary 19, 2024
- The post-pandemic Shenzhen rental housing marketSeptember 15, 2023
- Shanghai’s high-end rental housing market on the riseMarch 18, 2022
- China’s rental housing sector continues to attract investorsOctober 15, 2021
- Recent development of China’s rental housing sectorJune 22, 2021