"I'll Pay Cash for This Home"... Cash Purchases Rise and Loan Share Falls as Sub-1 Billion Won Listings Increase in China

Speculative Demand Declines as Purchases for Residential Use Increase

"Real Estate Market Entering Stabilization Phase"

It has been observed that a growing number of people in China's tier-one cities, Guangzhou and Shenzhen, are purchasing homes with lump-sum cash payments rather than taking out loans.

On September 17, Sina Finance in China, citing data from the Guangzhou Real Estate Brokerage Association, reported that the proportion of mortgage use in Guangzhou housing transactions has been consistently decreasing. The loan proportion, which was 45% in June, dropped to 38.8% in July and further to 35% in August.

China Baidu.

More Low-Priced Listings Ease the Financial Burden

Shenzhen is seeing a similar trend. According to the Bayke Research Institute in Shenzhen, the share of cash buyers in the city’s real estate transactions reached 25.3% in the first half of this year, an increase of 6.3 percentage points from the same period last year. Meanwhile, the proportion of mortgage-backed home buyers, which was as high as 87.7% in October 2024, dropped significantly to less than 75% in June this year. In other words, the percentage of people paying the entire purchase price in lump-sum cash has risen considerably.

The media outlet assessed, "As more low-priced properties have become available in the real estate market, buyers’ burden to raise funds has eased." It added that as speculative demand has subsided and transactions are now mainly for actual residential use, the proportion of loan-funded purchases has naturally declined, leading the market into a more stable phase.

In the Guangzhou and Shenzhen real estate markets, existing apartments, rather than new sale units, have become the main focus of transactions. With the market entering September, traditionally regarded as peak season, the pace of existing apartment transactions is also accelerating. As market sentiment stabilizes, expectations are rising that the real estate market will enter a soft landing phase.

The Market is Restructuring Around Low-Priced Listings and Homes for Actual Use

Photo for article understanding. Pixabay.

Since last year, the Guangzhou real estate market has been driven by transactions in low-priced and small-sized apartments. According to data from Guangzhou’s Housing and Urban Development Bureau, in the first half of this year, listings priced under 2 million yuan (approximately 413.94 million won) made up about 62% of all transactions, up 3.22 percentage points from the same period the previous year. The trend toward actual user dominance is also evident in Shenzhen. According to the Leyoujia Research Center, 31.1% of Shenzhen’s transactions in August involved properties priced below 3 million yuan (about 620 million won)—the highest proportion this year. When including properties priced below 5 million yuan (approximately 1.035 billion won), the figure rises to 64.6% of all transactions.

Li Yuja, Chief Researcher at the Guangdong Housing Policy Research Center, stated, "As housing prices return to reasonable levels, residents of tier-one cities can now afford the full purchase price of these properties with just their savings." Buyers are stepping in whenever highly cost-effective properties appear. Researcher Li added, "As housing has reverted to its primary role for residence rather than speculation, more buyers are now paying in full with cash, and this process is contributing to the reduction of household debt."

In fact, the existing apartment markets in Guangzhou and Shenzhen are recovering in both transaction volume and price. In August, the number of online registered transactions for existing apartments in Guangzhou was 8,624 (total area: 858,000 square meters). In Shenzhen, total transactions for existing apartments stood at 5,535 units (including 5,108 residential existing apartments), marking a 5.1% increase compared to the same period last year.

This content was produced with the assistance of AI translation services.