Citi Price Drop Chart
Observations On The Chinese Real Estate Sector Following The Biggest Price Decline In 5 Years
We checked with the transaction details in the two cities, and the significant drop in March ASP was due to the change in product mix transacted in the period. For example in Beijing, in March, the number of high-end property units (ASP>RMB30K/sqm) transacted only accounted for 7.4% of total units transacted (25.2% in Feb), while low-end units transacted (ASP<RMB16K/sqm GFA) jumped to 36.5% of total units transacted (Feb of 9.9% only). Most of the other cities had similar situations. Local governments have kept strict pre-sale permit controls for high end projects while they encourage more launches of low-end projects, and the change in product mix should result in an ASP decrease.
I find this paragraph confusing. (ASP>RMB30K/sqm) is a price point not a housing sector. ASP<RMB16K/sqm GFA) GFA==Gross Floor Area? is just confusing. Both look like price per square foot declines on the surface, not necessarily product mix declines.
As to the numbers simply being fudged. My understanding of the new rules is the price of housing must track other economic growth numbers. That would leave room for a healthy rise in prices, if one were simply making up numbers.
So, what's next? The Chinese start dumping their cash into stocks and gold and silver instead? That is, until they have to cover their debts and then they start to panic-sell same?