With tens of thousands of new developments yet to be completed, house hunters are looking again at older buildings. End buyers don’t trust developers any more.
Already a subscriber?Deep in the heart of Shanghai’s former French Concession, buyers are inspecting an old apartment, taking in the art deco tiling and high-ceiling rooms – theirs for an asking price of 21 million yuan .
In developed economies in Europe and North America, existing homes are the norm for buyers. But in China, the biggest building boom in human history has created millions of new homes. “The primary market is really shrinking both supply and demand,” said Zerlina Zeng, head of east Asian corporates at research group CreditSights. “I think going forward you will see more vibrant activity coming from the secondary market.”
In the same cities in 2021, sales of new builds were running at almost twice the volume of previously owned homes. The gap between second-hand purchases and those for new homes widened even more in March, theIn a sign of the property market’s precarious state, sales of new builds, which represent the basis for core national statistics on the market, are falling sharply. In the first quarter, property sales by floor area fell 19.4 per cent, according to the National Bureau of Statistics.
“As more people are looking to sell their flats, with more second-hand flats in the market, there is more flexibility for negotiation,” said Andy Lee, chief executive for mainland China at Hong Kong-based broker Centaline.One recent buyer in Shanghai, who asked to remain anonymous, said he bought a second-hand home because prices had fallen “to a level where I can afford it” and because of mortgage incentives offered by the local government to boost the property market.
In Shanghai, a visitor to the art deco building said many people in China still had the mindset of “I need to buy my new home”.
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