2015-01-19

Beijing New Home Sales Collapse

Beijing existing home prices increased in December and land sales have picked up, but new home sales have fallen.

It was only two weeks ago that I posted Beijing New Home Sales Surge To 5-Year High in December
Even though existing home sale prices are down nearly 6% yoy according to CREIS data, new home prices are up 1.8%. Sales surged in December, up 62% mom and 73% yoy. Sales hit 19,893 units, second only to the December 2009 total of 20,516 units.

The final week saw sales of 6551 homes. Since then, sales have fallen every single week, to only 1955 in the past week, a drop of 70%. As mentioned in that post, part of the boost was a statistical fluke due to owner-built housing being added into the numbers.

The excuse for the moment, which has some validity, is the upcoming Spring Festival. Many people buy homes over the Chinese New Year because they have time off to look at homes and developers offer deals. The holiday is late this year, February 19. Effectively, it will last until the start of March. Should this "window" of low activity persist, we will not know until March whether this is a lull or a retreat in the market.

Beijing is an important part of the bifurcating Chinese housing market story. If there's a rebound, it will confirm the housing story is a localized one. If it turns out to be a bear market bounce, the mood in the market will swing decidedly negative. Stories such as Hangzhou Butterfly Effect: Price Decline Hurricane To Sweep China will go from speculative to prophetic.

Until proven otherwise, I do believe this is a bear market. The bifurcation story is possible due to the reality of where housing over supply is located, but in a real bear market, they are few shelters from negative sentiment. The behavior of the oil, copper, iron ore and euro are the model: investors are insufficiently pessimistic; support fails, new lows are made.

iFeng: 北京新房成交量连降4周 下降幅度达到70%

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