Lower Down Payments Boost Beijing’s Pre-owned House Sales But Prices Still Fall

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A residential building in Beijing.

After a policy initiative in June that lowered the down-payment requirements and mortgage rates home buyers faced, the pre-owned housing market in Beijing has seen increased sales but a decline in prices in July.

Sales of pre-owned homes reached 15,600 units in July, the highest monthly volume in 15 months, according to data from the Centaline Property Research Institute. However, in August, the initial effect of the policy diminished slightly, with sales falling by 7.8% to 14,400 units.

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The June policy initiative in Beijing led to increased sales of pre-owned homes but declining prices, peaking at 15,600 units in July and dropping by 7.8% in August.
Pre-owned home prices in Beijing returned to 2016 levels, with average prices of 54,000 yuan per square meter in July, reflecting a 25% drop from the peak.
First-time buyers are driving the market due to reduced barriers and affordability, yet economic uncertainty maintains a cautious outlook.

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Who’s Who

Centaline Property Research Institute: The Centaline Property Research Institute provided data indicating that July saw the highest monthly sales volume of pre-owned homes in Beijing in 15 months, with 15,600 units sold. However, sales fell by 7.8% to 14,400 units in August, yet remained above the 12,000-unit benchmark for market health for six consecutive months. Chief analyst Zhang Dawei noted the market's current "price for volume" phase, where policy-induced price reductions have increased market activity despite falling prices.

Centaline Property Agency Ltd.: Centaline Property Agency Ltd. is a prominent real estate agency. Zhang Dawei, its chief analyst, noted that recent policy-induced price reductions in Beijing's pre-owned housing market have led to increased sales. The market is currently in a "price for volume" phase, where buyers have more negotiating power and sellers lower prices to close deals.

Anjuke Beijing: Anjuke Beijing is a website for homebuyers, providing data on housing prices in Beijing. According to the site, the average price of pre-owned homes in Beijing returned to levels last seen eight years ago, dropping to 54,000 yuan per square meter as of July 2023. This represents a roughly 25% decrease from the peak prices.

China Index Academy: The China Index Academy is an influential research institution that provides data and analysis on the real estate market in China. The academy tracks various housing trends and reports on property transactions, including pre-owned and new homes. In the article, Xu Yuejin, the deputy director of research at the academy, provides insights on market dynamics and the evolving buyer behavior in Beijing's housing market. The academy also monitors national pre-owned home prices and transaction patterns.

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What Happened When

Before 2020：: Approximately 80% of home buyers in Beijing were selling their existing homes to buy new ones.

The first half of 2024：: The percentage of home buyers in Beijing who were selling their existing homes to buy new ones dropped to below 40%.

January to July 2024：: The proportion of pre-owned home transactions in 25 major cities rose to 64.1%.

June 2024：: A policy initiative was introduced that lowered down-payment requirements and mortgage rates for home buyers.

On June 26, 2024：: Beijing authorities announced reductions in down payment requirements for first-time and second-home buyers and lowered the floor on mortgage rates.

July 2024：: The pre-owned housing market in Beijing saw increased sales but a decline in prices. Sales of pre-owned homes reached 15,600 units, the highest monthly volume in 15 months.

As of July 2024：: The average price of pre-owned homes in Beijing dropped to 54,000 yuan per square meter.

August 2024：: Sales of pre-owned homes fell by 7.8% to 14,400 units. The average price of pre-owned homes in 100 cities across China dropped by 0.71% month-on-month and marked the 28th consecutive month of price falls.

By August 2024：: Pre-owned home prices fell year-on-year in 100 cities across China, with more than 90 cities experiencing falling prices for 15 straight months.

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