Skip to content

China’s Housing Market Continues Decline, Early Mortgage Repayment on the Rise

The Chinese real estate market, particularly the second-hand housing market, is experiencing a downward trend. The city of Shanghai is leading the decline in prices.

Out of 70 major cities surveyed, 63 saw a decrease in second-hand housing prices in June. New home prices in 31 cities increased slightly compared to the previous month, but the overall downward trend is evident when considering both new and second-hand homes in key cities like Beijing, Shanghai, Guangzhou, and Shenzhen.

A report by Chinese media outlet “The Paper” reveals that less than 30% of Cina’s top 100 real estate companies achieved year-on-year growth in monthly performance this June. Nearly 60% of the top 100 companies experienced a monthly performance decline exceeding 30%, indicating a challenging market situation. The construction industry is also affected, with a significant decrease in new housing construction area and real estate development investment.

The market experienced a rebound in March and April due to pent-up housing demand from the pandemic, but it cooled off quickly afterwards. Real estate companies usually increase supply in June to boost sales, but this year the supply was at a five-year low. The concept of “early repayment” has been gaining traction in the market, with individuals choosing to repay their housing loans early due to higher mortgage rates on existing loans from previous years as well as declining investment returns from financial products. Both the early loan repayment trend and falling housing prices indicate clear downward pressure on the Chinese real estate market.

Source: Deutsche Welle, July 15, 2023
https://p.dw.com/p/4Twun