China's total fixed assets investment was RMB9,987bn January through September 2008, up by 27.6% year-on-year. The increase was 1.2 percentage points more than a year ago. Overall, real estate development accounted for RMB2,128bn, up by 26.5%, and 3.8 percentage points less than a year ago.

 

During the first three quarters of 2008, 275 million m² of land was purchased in China, down by 2.9% year-on-year. The increase was 20.7 percentage points fewer than a year ago, while 179 million m² of land was developed, down by 1.6% year-on-year, with a drop of 12.9 percentage points from the same period a year earlier.

 

The substantial cooling of the global housing market has had a major psychological impact on investors, and has forced a downward adjustment of China's housing market. The increase of housing prices has slowed, and some cities have also been experiencing a tremendous drop in real estate pricing. For example, what had been a  typically monthly increase of housing prices in such major cities as Shanghai, Guangzhou and Shenzhen turned negative. As a result, since housing prices are continuing to drop and some houses are even returned to real estate companies, potential home buyers are expecting falling prices to continue and are waiting on the sidelines before purchasing.

 

The housing market slump has seen a reduction in sales for the first time since 1998, Although investment in real estate development still continued to increase rapidly, the increase of corporate funding sources had slowed considerably, and. by the end of August 2008, it had dropped to the lowest level since 2004 putting greater financial pressure on real estate developers.

 

The adjustment in China's real estate market should be greater in 2009 against the background that the global real estate market is in a tough climate and the growth of China's economy is slowing. Since the demand for housing is weak, and there exists an expectation of lower prices and negative market conditions, the rate of investment in real estate development could fall drastically. Although investment in real estate development was comparatively high in 2008, the rate of investment is expected to fall below 10% in 2009. In 2008 the "trade volume reduced and prices stopped rising", but in 2009 both trade volume and prices are likely to fall. The housing prices would plunge more in larger cities than smaller, and the prices of top-end houses would fall more than mid- and low-end.

 

To avoid the real estate market being over-adjusted, China's government is expected to develop policies to stabilize the market in 2009, and then to prevent violent swings in housing prices to help the market grow steadily.

This is a quarterly report and is produced 4 times a year, with yearly subscription available.

1.1 Finished Investment in Real Estate Development

1.2 Funds

1.3 Purchase of Land and Completed Development of Land

1.3.1 Area of Land Purchased

1.3.2 Area of Land Developed

1.4 Construction of Housing

1.5 Sales of Housing

1.5.1 Sales of Commercial Buildings

1.5.2 Sales of Commercial Housing

 

2.1 Sub-index of Investment in Real Estate Development

2.2 Sub-index of Fund Sources

2.3 Sub-index of Area of Land Developed

2.4 Sub-index of Building Area under Construction

2.5 Sub-index of Area of Vacant Commercial Buildings

 

Chapter Three: Housing Prices in China's 70 Mid- and Large-sized Cities in 09/2008

3.1 Prices of Newly-built Housing Rose by 3.9% YoY

3.2 Prices of Second-hand Housing Rose by 2.6% YoY

3.3 Prices of Newly-built Non-housing Rose by 3.0% YoY

 

4.1 Global Real Estate Market is in a Tough Climate, and Real Estate Developers and Buyers are Losing Confidence

4.2 The Market is Cooling down, and Sales Volume of Housing Drops Drastically

4.3 Welfare Housing is in Short Supply, and there are Difficulties to Offset Structural Imbalance

4.4 Housing Prices Fall, Especially in Some Tier-1 Cities

4.5 Increase of Fund Sources Slows Down to the Lowest Level Since 2004; Companies are under Great Financial Pressure

 

5.1 Policies on Land Management

5.2 Policies on Low-rent and Low-priced Housing

5.3 Policies on Real Estate Trading

5.4 Policies on Financial and Tax Issues

5.5 Regulations and Laws

 

6.1 Investment in Real Estate to Reduce Dramatically

6.2 Demand for Houses for Both Speculative Purpose and Residence to be Restrained

6.2.1 Homebuyers' Capacity to Pay is Decreasing and They Become less Willing to Buy

6.2.2 Speculators' Demand is Dropping

6.2.3 Housing Prices Continue to Fall

6.3 Trend of Policies on Real Estate Industry

6.3.1 The Structure of Supply and the Policies on Welfare Housing Should be Improved

6.3.2 More Support should be Lent to People Who Want to Buy Houses for Residential Use

6.3.3 Policies on Real Estate Credit Should be Improved to Prevent Financial Risks

6.3.4 Encouraging Multiple Ways of Financing the Real Estate Industry

6.3.5 Forming Scientific Ways of Housing Consumption, and to Encourage Renting as well as Buying Houses