As the Chinese government’s tightening measures begin to really hit home increasing numbers of real estate agents in the country are shutting up shop completely or are closing branches due to the slowing residential housing market.
Since the beginning of 2011 around 1,000 real estate agents have closed down in Beijing, three quarters of whom were smaller firms, according to data from Beijing Homelink Real Estate Service Co Ltd. Latest data from Beijing shows sales of previously owned homes have fallen 50% year-on-year to September to just 8,750 units.
In October one of the country’s largest real estate agents, Centaline closed 40 branches in Beijing, although it’s claimed these closures were part of restructuring the business. It’s not just Beijing which is being affected as other major cities such as Shenzhen and Guangzhou have also seen increasing numbers of branch closures. According to the local real estate association in Shenzhen, the number of Realtor offices has dramatically decreased from around 8,000 at the beginning of 2011 to less than 2,200.
Official data shows China’s average home prices last month were lower for the first time this year, and while the government policies are obviously working, there are worries prices could drop too much, as there have already been protests by homeowners and investors in Shanghai and Beijing over declining real estate values, and economists are worried about the possible effect on the economy. At the moment Beijing has managed to maintain economic growth while controlling inflation, with policies being centered on restrictions on property prices without creating a hard landing. Latest data shows average house price inflation in China’s 70 major cities fell to 2.8% last month compared to October 2010, and average prices of new homes in China fell by 0.2% in October from September.
The Chinese premier, Wen Jiabao has already stated Beijing will not lift property tightening measures until prices have returned to a more normal level but experts think local governments at the least will relax their property tightening measures next year. Last month Beijing blocked an attempt by the southern city of Foshan to relax restrictions on the number of homes a family can buy, but has turned a blind eye to steps taken by other cities to relax mortgage lending rules.