Wang Jian, a 29-year-old working for a Beijing technology company, saw his hopes of buying a flat in the capital evaporate overnight when strict new cooling measures left him unable to afford the down payment. He had already paid the deposit on a 7.4 million yuan, 80 square-metre flat in the city's Shaoyaoju neighbourhood when the new policy raising the minimum requirement from 40 to 80 per cent added 2.9 million yuan to his down payment. He had no choice but to pull out of the deal.
I'm not in a hurry now because I see no prospect of prices going up this yearNine months on, and with average secondary home prices down about 15 per cent from their peak in April, Wang is glad he missed out back in March. When he looked for flats of a similar size in Shaoyaoju recently, he found the average price had fallen 17.4 per cent, from 92,300 to 76,280 yuan per sq m. "I'm not in a hurry now because I see no prospect of prices going up this year," he said. Wang is one of Beijing's many "wait-and-see" homeseekers who have been sitting on the sidelines watching their purchasing power grow as the measures to rein in property prices have steadily taken effect. According to 5i5j, a major housing agent in the capital, prices of second-hand homes have declined for eight straight months and are now down 15 per cent from April's peak. Turnover fell by a half last year to 136,237 units, from 272,434 in the whole of 2016. In Shaoyaoju, the average price has tumbled from 91,947 yuan per sq m in March to 77,280 in January, and monthly sale are down to less than 20 units, according to local brokerage site Anjuke. Beijing's home market enters deep freeze The price decline has been much more pronounced than official data suggests. Government data showed secondary home prices dipped just 0.9 per cent in November from a year earlier. As secondary home transactions accounted for almost five times the number of new-home sales in 2017, their price movement has become increasingly important for average homebuyers in the city. The drop in prices has seen secondary homeseekers borrowing less to buy units too. According to 5i5j, just 41 per cent of buyers last year took out mortgages, down from 55.4 per cent in 2016; just under a third (31 per cent) used their own money - including the proceeds from sold homes or cash from their relatives - up from 22.8 per cent in 2016. Guo Yi, chief marketing officer at Yahao Real Estate, said the primary and secondary markets are two vastly different segments, with the former increasingly confined to a wealthy few buying big, luxury homes in far-away suburbs. The second-hand home market is more geared for the mainstream, with about two thirds of demand coming from buyers "trading up" to bigger, more expensive houses. The share of so-called trade-up demand has already tempered from 75 per cent before the curbing policies were introduced in March, when skyrocketing prices prompted frenzied "trading sentiment", according to a report by property agent Maitian. The share of demand that comes from first-time buyers has climbed from 25 per cent to 33 per cent now. Turnover of new homes also fell by about a half in Beijing, from 58,300 in 2016 to 28,000 units last year, according to China Real Estate Information Corp. Prices in November were down just 0.3 per cent from a year ago, according to official data. Zhang Yesong, chief analyst with Maitian, said he expected the secondary market to stabilise in 2018, with no major change in policy direction. Turnover is expected to rise from a trough, and prices are likely to fall further, though at a slower pace. Turnover has already climbed on a monthly basis for the past two months, according to 5i5j. Read the original article on South China Morning Post. For the latest news from the South China Morning Post download our mobile app. Copyright 2018. More from South China Morning Post: