In China’s home market, there is good news and bad. The bad news is that prices are tumbling. The good news is that the decline seems to have sparked a surge of sales activity.
Last week, figures from China’s official National Development and Reform Commission said that property-price growth in 70 of the country’s largest cities in November dropped 0.5% compared with October, the fourth consecutive month-over-month decline. On a year-over-year basis, price growth was at 0.2%, a record low, with Shenzhen registering a 14.8% year-over-year drop.
But falling prices seem to be where the similarity between the Chinese market and ailing Western markets ends. In China, falling prices have triggered a surge in sales activity, a sign of enormous pent-up demand in that market.
According to Shenzhen’s municipal government, 6,435 new flats sold in the city in November, or 215 units a day. That is up sharply from the last week of October, when an average of 58 units were being sold a day.
Prices are likely to fall further next year because there is still a glut of apartments that were built in recent years as speculators helped drive up prices beyond the means of many ordinary home buyers. Thousands of units also are expected to be added to the market next year.
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Source: Wall Street Journal which requires a subscription so the full story can be found on Reflected Places