Improved transport is increasing the sales of low-priced apartments.
The biannual Beijing housing fair is often considered a trend-setter for the real estate industry’s performance in China. The latest Beijing housing fair was held at the China World Trade Center earlier this month. According to reports, the fair attracted over 150,000 visitors, while contracts worth RMB3.1 billion were signed.
Though skeptics dismissed the figures as being cooked up by developers, the reality is that property sales have started rebounding in China. Reports from Beijing, Shanghai, Shenzhen, Chengdu, Hangzhou and many other cities point to increased sales in March, in terms of new and second-hand dwellings.
In Shenzhen, the migrant city adjacent to Hong Kong, housing sales in the first quarter reportedly doubled over the previous quarter. The robust sales, however, have not necessarily pushed up prices. In February, the nation’s general housing price index declined for the third month in a row, by a negative 1.2 % year-on-year, according to the NBS.
The State Council Development Research Center, however, said it expects general housing prices to decline at a much lower rate of 10% or even lesser.
The indicators clearly show that on the price front it is more or less going to be a flat year, while in terms of sales it would be a much better one. If this turns out to be true, then it would be a rare situation, wherein it would benefit both homeowners and residential housing investors.
Experts are not too sure whether there is any correlation between the RMB4 trillion fiscal stimulus plan and the reversal of fortunes in the real estate market and also whether the package would continue to help in creating more choices for potential home-owners and investors.
Many argue that the stimulus plan is impacting the housing market in a positive way.Home-buyers have not earned as many direct incentives from the stimulus plan as car buyers. There are some cuts in the interest rates, but not as much as in the case of cars with smaller engines.
What, perhaps. has made the difference is the plan by the government to build up urban public transport infrastructure in the last few years, especially subways and roads. This has made it possible for home-buyers who were once deterred by exorbitant downtown prices, to shop for cheaper houses in the more distant suburbs.
Beijing is an example. The city did not embark on a large-scale subway development plan until 2004 when work on three new lines, with a total length reaching 80 km, began.
By the end of 2008, Beijing had eight subway lines in operation, with a total length of 200 km. According to planners, the city’s subway network will expand to 561.5 km in 2020, exceeding that of New York City.
In tandem with all these, new housing complexes have sprung up even beyond the Fourth Ring Road, once considered the city limits. More housing projects are coming up beyond the Fifth Ring Road and Sixth Ring Road, and some even in distant suburban towns.
China Daily reported some of the smaller towns in Hebei province, such as Yanjiao and Langfang, are already connected with the national capital city by expressways. They are now seeking light rail connections – for the purpose, as local officials put straightforwardly, of attracting people.
According to sources from the Beijing housing fair, most of the sales contracts actually went to the smaller units in the relatively distant suburban housing complexes.
It could be said the most effective mechanism to keep up some competition in a city’s housing market is its growing mass transit system.