The Spring Festival is traditionally a slow season for the real estate market. During the holiday, the Beijing and Shanghai property markets entered a "dormant state," with supply significantly reduced, buyers temporarily withdrawing, and transaction volumes sharply shrinking.

After the Spring Festival, have housing prices loosened? Have prices in first-tier cities represented by Beijing and Shanghai really entered a downward channel?

The media selected the second-hand housing market, which is more sensitive to market changes, for on-the-ground investigation, visiting some intermediary stores in downtown and suburban areas of Beijing and Shanghai respectively, in order to restore the current real market situation.

Beijing: Second-hand housing prices remain firm; sellers reluctant to cut prices

After working in Beijing for five years, Ms. Si (pseudonym), who just obtained home-buying eligibility, has been in a state of anxiety recently. She has been following the prices of second-hand homes in certain residential areas on multiple housing agency online platforms, but has yet to see any sign of loosening. Her original plan to buy a home around the Spring Festival holiday has been repeatedly delayed.

"They say the period around the Spring Festival is the slow season for the property market every year, so I thought the possibility of price loosening would be greater." From the 930 regulation to before the Spring Festival, Ms. Si had been following second-hand housing information in some communities in Chaoyang and Fengtai districts online. She thought now was a good time to buy a second-hand home, but unexpectedly, the listed prices online not only did not drop at all, but the number of listings actually decreased.

In fact, there are quite a few buyers who hold such thoughts. A People's Daily Online reporter visited some second-hand housing intermediary stores and found that housing intermediaries generally hold an optimistic attitude toward the current price trends in the six urban districts. "At present, second-hand housing prices in some traditional high-price areas are still stable with slight increases, because second-hand homes are all owned by individual owners. Unless they urgently need money or are trading up, their willingness to cut prices is not strong. Most still have high expectations for price increases and are still waiting to see," said an intermediary at a Lianjia store.

January is always a slow sales season for the property market, and this year was even more affected by the Spring Festival holiday. In January, Beijing's second-hand housing transaction volume showed a clear decline, with signed contracts down compared with previous months last year. According to official data published by the Beijing Municipal Commission of Housing and Urban-Rural Development, Beijing's second-hand housing transactions in January 2017 totaled 12,860 units, down 28.9% from 18,079 units in December 2016.

Although activity in the second-hand housing market was sluggish, housing prices rose slightly while stabilizing. According to statistics released by an intermediary agency, the average reference price for second-hand housing transactions in Beijing in January was 60,438 yuan per square meter, up 1.02% from 59,829 yuan per square meter in December 2016.

Industry experts believe that the significant decline in Beijing's second-hand housing transaction volume in January was mainly affected by the Spring Festival holiday. From January 26 to February 3, the Beijing real estate trading system and the existing housing trading service platform suspended online signing, making a reduction in transaction data unavoidable. However, compared with transaction volumes around the Spring Festival in February 2016, Beijing's second-hand housing market performed steadily in January this year.

Kong Dan, manager of the Market Research Institute of Vanke's My Home Group, said that affected by purchase restriction policies and the recent tightening of bank credit, second-hand housing transaction volumes have been on a downward trend from last October to this January, and it will take time for this to be reflected in prices.

"For real estate market regulation, some banks raising mortgage rates in Beijing on their own in January is actually more direct than the previous purchase restriction policies, so second-hand housing transaction volumes will continue to decline in 2017."

Kong Dan believes that, looking at the whole city, housing prices vary greatly across regions. Slight price increases in individual areas do exist, while areas where prices rose too quickly earlier have already begun to see price cuts. In terms of unit type, high-total-price, large-unit non-ordinary residences have seen obvious price cuts, while small units that meet rigid demand remain sought after, and owners still hold expectations for price increases after the regulation ends.

The current continued decline in second-hand housing transaction volumes already reflects the shrinking market situation. He predicts that if transaction volumes remain sluggish, by the third and fourth quarters of this year owners' willingness to actively cut prices will become stronger, and housing prices may fall significantly.

Shanghai: Second-hand housing prices stable with slight declines; some owners switch from selling to renting

The first client agent Xiao Zhang (pseudonym) received after the Spring Festival was a local Shanghai landlady. Because the second-hand housing market is not rising as frantically as last year, this landlady plans to switch her listed property from sale to rent.

Xiao Zhang told the reporter: "With strengthened regulation in the Shanghai market, landlords who are not in a hurry to sell are switching from selling to renting, waiting for a better time to sell. As a result, market supply has further decreased."

From the seller's psychology, Xiao Zhang said: "Unless landlords are in a hurry to sell or have already set their sights on a new home, they generally will not take the initiative to cut prices. However, compared with before the Spring Festival, most landlords' asking prices are more realistic and rational, with less padding."

During the reporter's visit, a nearly new apartment in Zhengchenyuan, a mid-to-high-end community in Shanghai's former Zhabei District, was listed at a total price of 6.5 million yuan, while the final transaction price was 6.1 million yuan, indicating that room for negotiation is also increasing.

At the same time, buyers' mentality has also changed. "At present, there is more looking than buying," said Xiao Li (pseudonym), an agent working in Shanghai's Baoshan District. "An old house in Baoshan District with a total price of 2.5 million yuan has been shown 17 times, but there are no clients with a strong intention to buy."

Xiao Li showed the reporter the changes in landlords' asking prices in the same community in Baoshan District (total price about 3 million yuan). Among 15 listings in the same community, four landlords took the initiative to lower their listed prices, with reductions ranging from 50,000 to 100,000 yuan.

"Second-hand housing asking prices are currently stable. Even if landlords adjust their asking prices because they are eager to sell, the reduction is not large," Xiao Li said.

Data show that during this year's Spring Festival, the Shanghai property market already showed the characteristics of falling volumes and prices. According to statistics from Shanghai Centaline, from New Year's Eve to the sixth day of the first lunar month, Shanghai's newly built commercial residential transactions totaled 949 square meters, with only 8 units sold, down 71.1% from last year's Spring Festival period and setting the lowest Spring Festival transaction record since 2011. At the same time, the average transaction price of new homes in Shanghai was about 30,405 yuan per square meter, down 9.48% year on year.

Lu Wenxi, a market analyst at Shanghai Centaline Property, said that a series of data in January shows that the property market has basically established a downward channel. From the perspective of buying psychology, there will be no irrational chasing of rising prices. In addition, 2016 overdrew considerable purchasing power, so the light start in January already implied that market transactions would not be active.

Lu Wenxi analyzed that, according to past practice, the market will gradually recover vitality after the holiday, market supply will gradually increase, and this will pave the way for the small spring rally in March. However, current market willingness to trade is not high, and it will take longer than usual to gather popularity. It is expected that the subsequent supply pace will not recover immediately, and the first half of February will still be spent in a sluggish pattern.