House sellers in Beijing are cutting prices aggressively, according to brokers, despite official statistics that show the housing market in the Chinese capital remains buoyant.
Interviews with more than two dozen real estate brokers across the capital, long one of China’s most desirable real estate markets, show transaction prices have fallen between 10 and 30 per cent from their peak in 2021.
Their testimony runs counter to a widely watched National Bureau of Statistics index of existing home sale prices in Beijing and adds to concerns about the impact of the property market slowdown on the broader Chinese economy’s struggle to recover from the coronavirus pandemic.
According to the NBS, Beijing’s existing home prices dipped 1.4 per cent in November year on year, and were up 5 per cent from two years ago.
“That is very different from what the public feels,” said Dan Wang, chief economist at Hang Seng Bank China. “The government may want to use official numbers to restore confidence in the market.”
The discrepancy has also stoked concerns about the quality of China’s official statistics. Some investors, eager for accurate data as they respond to this year’s economic slowdown, fear officials are manipulating figures to meet ambitious growth targets.
“Actual home price falls are far bigger than NBS numbers,” said Liu Yuan, a Shanghai-based researcher at Centaline Property Agency. “Official statistics could make policymakers think the market is doing fine when it is actually in deep trouble.”
Analysts warn the housing sector crisis poses a huge risk to the economy, chilling construction activity, cutting household wealth and damping consumer confidence. “The Chinese economy won’t get back on track until the housing market recovers,” said Dan.
The drop in Beijing home prices is particularly notable. Prices in the capital, where well-paid government workers are protected from economic turmoil, had remained stable even after Chinese leader Xi Jinping launched a crackdown on property speculation in 2021.
An existing housing price index compiled by Centaline reported a 10 per cent drop in Shanghai in the 12 months ending June, but a 9 per cent increase in Beijing over the same period.
Since the second half of this year, however, home sellers in the capital have started offering steep discounts.
Old apartments, which were built before 2000 and account for more than half of active listings, are leading the wave in price cuts. In Panjiayuan, a neighbourhood in downtown Beijing, a three-bedroom apartment in a residential complex built in the early 1980s is listed for Rmb3.1mn ($435,000), down from Rmb4m a year ago. A broker for the flat, who declined to be named, said it had received few inquiries and prices could fall further.
“We are open to negotiation if buyers are sincere,” the broker said. “But there are not many of them.”
Newer flats are not faring much better. In Chaoyang, a central Beijing diplomatic and business district, a two-bedroom apartment in the popular Apple Community compound built in 2005 sold in October for Rmb6mn, brokers said. A similar unit in the same neighbourhood sold for Rmb7.5mn in March.
Luxury homes are also losing lustre. A four-bedroom apartment in Oak Bay, a prestigious residential complex, is now priced at Rmb33mn, down from Rmb38mn in March.
Many home sellers have been forced to cut prices multiple times in a short timeframe. Jane Wang, an office worker in Beijing, listed her centrally located two-bedroom apartment for Rmb5.6mn in March. Two months later, she had not received a single inquiry.
Wang reduced her asking price to Rmb5.3mn and then Rmb5mn before, in desperation, she relisted the apartment early this month for Rmb4.7m — lower than the price she paid for it four years ago.
“I will give up selling the apartment if no one accepts the price,” she said.
Authorities are aware of the sector’s woes but have been reluctant to make third-party data from leading real estate brokers, which regularly feed transaction and listing information to the Ministry of Housing and Urban-Rural Construction, available to the public, according to people familiar with the matter.
In August this year, property platform Beike apologised after publishing a report that suggested 12 per cent of completed residential apartments in China’s 28 major cities were unoccupied. The platform has since been banned from publishing historical transaction prices.
“The government is angry about the report and Beike has since become a lot more cautious in releasing data to the public,” said the person close to the company.
The lack of reliable data does not engender confidence in buyers. Wang Lei, a Beijing-based marketing executive, postponed plans to buy a home this year in anticipation that prices would fall further.
“I don’t need the government to tell me everything is fine,” said Wang. “It is not.”
Additional reporting by Wenjie Ding and Nian Liu
