China’ Property Market: Megacities’ Cooling Vs. Satellite Cities’ Booming

China's overheated housing market in the first-tier cities are recently struggling with a slow-down growth due to the quickly developing rental market and unfavorable government policies such as higher mortgage rates, down-payment requirements, and limits on buying extra houses for investment. Therefore, the hot housing market has now spread from first-tier cities-- Beijing, Shanghai, Shenzhen and Guangzhou to their surrounding city clusters- Beijing-centered Jing-Jin-Ji region (shorthand for Beijing-Tianjin-Hebei), Shanghai centered Yangtze River Delta and Guangzhou-Shenzhen centered Pearl River Delta. These three regional economic hubs now account almost 44% of the housing sales in China.

Among these urban agglomerations, the distance to megacities has become one of the key factors that determine housing prices even without considering a city's economic development level. And now it is these satellite cities close to the first-tier cities such as Langfang in Jinjingji, Kunshan in Yangtze River Delta and Foshan in Pearl River Delta that drive the regional property market growth. 

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Not only does the market favor the urban agglomeration development, so does the government. During the National People's Congress in this March, Prime Minister Li Keqiang announced the development plan for the Guangdong-Hong Kong-Macao Greater Bay Area, aiming to reconsolidate the resources in Pearl River Delta and boost balanced growth in city clusters. For the property market, it signals new growth opportunities for smaller satellite cities in the next few years. It is estimated that the satellite city clusters surrounding Beijing, Shanghai, Shenzhen, Guangzhou, will each reach 200-300 billion RMB by 2030.

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