Buyers take wait-and-see attitude as inventory grows among developers

Home sales in Beijing , a city that is regarded as a barometer of China's overall property market, fell to a nine-year low in the first half of the year, raising concerns about the prospects of the country's real estate market.

There were 22,782 new homes sold in Beijing in the first six months (as of June 26), which constituted a slump of 48.7 percent over the same period last year, when 44,468 units were sold in the capital, according to Centaline Group data.

Sales by floor space plummeted by 48.1 percent, while by value slumped 38 percent, the brokerage firm said.

The white-hot market, following Beijing's decision to impose a 20 percent tax on homeowners' gain from housing sales, provided a high comparison base for this year's huge drop. But it is not the entire explanation, analysts said.

Zhang Dawei, chief analyst with Centaline Group's Beijing branch, said the weakening of the overall market, as well as expectations of more supply from government-subsidized housing projects, have pushed potential buyers to the sidelines in anticipation of further price drops.

Sales and prices will continue to decline in the coming months if mortgage policies aren't relaxed, he said.

The widespread "wait and see" attitude among homebuyers has ravaged sales figures and pushed the city's inventory to a record high.

Inventory exceeded 80,000 units as of June 20, according to Centaline, its highest point since January 2013. The stockpile of unsold units climbed rapidly when turnover cooled after the Spring Festival period.

So far, the average home price has yet to budge. It rose by 18.86 percent over a year ago to hit 26,687 yuan ($4,273) per square meter.

But analysts pointed out this was partly due to more high-end projects entering the market.

Of the 17 projects that are expected to make their market debut in July, more than half are medium- to high-end projects, according to Yahao Real Estate Service Corp.

The secondhand home picture in Beijing is more indicative of the current market sentiment. The average price of secondhand home transactions declined 4.4 percent in June month-on-month to reach 27,311 yuan per sq m. Turnover has declined for three consecutive three months, but the decline rate narrowed in June, according to Homelink Beijing, a real estate brokerage.

The cooling market has in turn dampened the land market. Land turnover dropped significantly in the second quarter, as total sale revenues for the period fell to 35 billion yuan from 74.9 billion yuan recorded in the first quarter, according to Yahao.

Thirty-three parcels were sold in the first quarter, while the number dropped to 20 in the second quarter, Yahao said.

Thanks to a strong first-quarter performance, land sale value in the first half still surged by 71 percent over a year earlier to hit 109.9 billion yuan, a record in the past 10 years.

Mao Daqing, executive vice-president of China Vanke Co Ltd , the country's largest property developer, remained confident, saying: "I don't think land prices in Beijing will drop significantly. A defining characteristic of the city's land market is its extreme short supply. Developers will jump in to bid on land when it becomes available."

Nationally, Beijing saw the biggest slump rate in housing sales second only to eastern Hangzhou, capital of Zhejiang province, which saw a decrease of 52.85 percent over a year ago, according to Centaline.