With many global property markets slowing due to a tightening of global liquidity and Chinese capital flight, many home sellers and property developers remain eagerly optimistic the Chinese Lunar New Year would provide a much needed bear market rally. However, if recent spending habits in China are any indication, this New Year is likely to come and pass with disappointment.
According to Beijing media group; Caixin, Lunar New Year spending in China failed to meet expectations. While spending technically increased to 8.5%, it was indeed the slowest rate of growth since 2011. Earlier today, the South China Morning Post reported New homes sales declined by 56% year on year in 17 major mainland China cities, including Shanghai and Nanjing, during the Lunar New Year holiday.
From a broader 30 city view, which includes re-sales, the three month moving average of home sales in China’s tier 1 and tier 2 cities remains firmly in negative territory. While Positive sales growth and prices are still being recorded in tier 3 cities.
According to the Chinese National Bureau of Statistics, land transactions fell 29% in January, the largest decline since May 2015. This has prompted various rounds of monetary stimulus, with the head of the Chinese Ministry of Finance Treasury Department suggesting quantitative easing could soon be considered a viable policy option.
The knock-on effects of a slowing Chinese economy, tight capital controls and a barrage of taxes and money laundering investigations has particularly impacted the Greater Vancouver and BC provincial housing market. In 2018, total sales volumes in BC fell 24.2%. While foreign buyers reduced their spending to $2.545B on residential real estate in 2018, down 31% from a year earlier.
That sum nearly totals recent estimates suggesting dirty money totalling as much as $2 billion in one year flowed into B.C.’s legal and illegal casinos and luxury real estate market.