DTZ

16 August, 2010

Highlight

• As a gesture of affirming central government’s policy to curb speculative demand, leading local governments such as Beijing and Shanghai have again fine-toned the definition of “2nd home” in a stricter manner, and re-affirmed the temporary ban of mortgage for 3rd or above home purchases. However, it is expected that no new major policies shall be introduced in the foreseeable future.
• China’s economic growth have softened a bit in 2010Q2, with GDP up 10.3%, CPI up 2.9%, M2 up 20.3%. Government’s determination to cool down the red-hot property market may further slow down nation’s economic growth in 2010Q3.
• Banks were cautious in granting development loans, which amounted to ￥289.9 Billion in 2010Q2 (down 21% QoQ) nationwide. In addition, personal new homes mortgage loans have recorded ￥59.3 Billion in July, witnessing its first sharp adjustment by 25.3% (MoM) since May 2009.
• DTZ’s survey revealed that overall new homes sales in Tier-1 and Tier-2 cities in July have been steady, except that Guangzhou, Chengdu, Xiamen and Changsha have recorded a reduction between 20% and 28.6%. Beijing and Tianjin, on the other hand, have recorded a noticeable rise of 38.9% and 24.6% (MoM) respectively. As compared with 2010H1, new home sales for tier-1 cities in July has dropped substantially by 27.6%.
• Average prices for Tier-1 and Tier-2 cities have both become soft in July, with an adjustment of 5.8% for tier-1 cities and 6.6% for tier-2 cities respectively, comparing to 2010H1. Coupled with the rising new supplies particularly for mass residential units in coming months, a further price correction shall be expected.
• The concern of unsold inventory level for DTZ’s 10 sample cities remains pre-mature, particularly that Guangzhou and Changsha are still at negative unsold inventory level (up to July 2010). However, the estimated absorption time for Shenzhen to take up its unsold inventory has prolonged from 9 months in June to 10.7 months in July.
• According to DTZ’s survey on the top ten sales chart in tier-1 cities, the proportion of luxury units further dropped to 28% in July. The reverse to mass residential driven market shall contribute to ease price rally.