The secondhand property market in Beijing and elsewhere is cooling because people would rather invest in stocks than reinvest back into real estate. This according to Hu Jinghui, vice-president of real estate company, 5i5j.
In the first quarter of this year, the trade volume of Beijing’s secondhand houses surpassed 30,000 units, up 28.9% from the same period last year. The houses with area under 90 square meters made up more than 70% of the total.
After March 18, when the People’s Bank of China, the central bank, announced a 0.27 percentage point hike in key interest rates, the auction listing volume of secondhand houses saw a 35% increase, accounting for almost half of the total number of secondhand houses.
According to Hu Jinghui the growth rate of the auction listing volume of secondhand houses with an area of between 80 to 90 square meters increased by 12%, those that are 100 to 140 square meters grew 21%, and properties with more than 100 square meters soared to 36%.
Executives from other real estate companies agreed and added that the effect spread to secondhand houses in Shanghai and Guangzhou.
The major reason for the surge in the auction listing volume is decreasing returns from property investment.
An example: the average monthly rent of a RMB960,000 mid-sized house in Beijing’s Central Business District is about RMB3,500. Take off taxes, property management fees, heating fees and other costs and the annual return is less than 4%.
So some investors sell their houses to get out of the property market and invest in the stock market instead.
Source: China Daily