MN Disaggregation Of Ethnic Data

Production Editor Needed

By Elaine Dunn

After a strong performance in 2013, sales of new homes in China fell 11 percent in May and 23 percent in the first six months of 2014 from a year ago, indicating a sustained downturn in the housing market.  The average new home prices in 70 cities fell 0.15 percent month-on-month in May.

A survey by a real estate firm showed sales of new homes in 40 big cities fell to 89.6 million square meters in the first half of this year, compared to 116.3 million square meters in the same period last year.


Average sales in the wealthiest Chinese cities such as Beijing, Shanghai, Guangzhou and Shenzhen dropped 37 percent in the first half of 2014, with Beijing taking the biggest hit of 49 percent.  The second-tier cities also did not fare much better.  Xiamen, the southeast coastal city, saw a drop of 44 percent in the first half of this year, compared to a year ago. Transactions also fell 37 percent in both Hangzhou in the east and Dalian in the north.  Sales in the smallest cities dropped an average of 50 percent.

Some developers are allowing buyers longer time to pay the 30 percent minimum down payment, while some are even offering zero-down payment terms.

The developers face another challenge: in addition to sluggish sales, there is a large inventory of empty units, which triggers deep price cuts to generate cash flow.  However, deep discounts are ineffective at drawing in buyers as people aren’t buying because they believe prices will decline further.  

The central bank recently urged the nation’s biggest lenders to speed up mortgage processing, telling them to give first-time home buyers priority to prevent the erosion of consumer confidence and drag down the economy as a whole.  (Citigroup estimates property sales account for 12 percent of China's GDP.)

Growth in spending in construction and renovation, which includes interior decoration, slowed to 14.2% in the first five months of this year.  Sales of furniture and appliances, though up, have slowed when compared to a year ago.  

Many agree there’s no doubt the housing bubble is about to burst.  The question is how low will prices drop and for how long?  Analysts expect to see developers and home-related businesses closing shop soon as the downturn continues.

Top 10 cities that saw the biggest month-on-month fall in new-home prices in July

Based on an Aug. 1 report from the China Index Academy, 76 out of the 100 cities in China saw month-on-month decline in July – the third consecutive month – dropping 0.81 percent compared to the previous month. 

The current average price of the 100 targeted cities is at 10,835 yuan (about USD $1,076) per square meter.  



Yuan / square meter in June

Yuan / square meter in July

Percentage change


Haikou city, Hainan province



- 2.04


Zhongshan city, Guangdong province



- 2.04


Guilin city, Guangxi province



- 2.05


Dalian city, Liaoning province



- 2.08


Guiyang city, Guizhou province



- 2.16


Nantong city, Jiangsu province






Mianyang city, Sichuan province





Sanya city, Hainan province





Heze city, Shandong province





Jilin city, Jilin province




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