Policy Boost: China's Real Estate Market Sees Signs of Revival
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Loading... - Chunhua Dong
- 16 Jul 2024
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China's residential real estate market, which has been in a downturn for three years, is showing signs of recovery due to recent government interventions. These measures, aimed at reviving the struggling sector, include purchasing unsold homes and easing home-buying rules in major cities like Shanghai, Shenzhen, and Guangzhou.
In mid-May, the central government announced initiatives to help stabilize the housing market. Local authorities were encouraged to purchase unsold homes, and new policies were introduced to make home-buying more accessible. For instance, downpayment requirements were reduced, and mortgage terms were made more favorable. These changes have started to resonate, with home sales transactions gaining 3.4 percent from April.
According to the Global Times, nearly 60 percent of the top 100 developers saw their home sales values increase month-on-month in June. The sales values of the top 100 developers reached USD 60.39 billion (CNY 438.93 billion), up 36.3 percent from May, indicating a positive response to the new policies.
Beijing joined other first-tier cities like Shanghai in easing home-buying policies, sending positive signals throughout the property sector. On June 26, Beijing announced supportive policies, including lowering the minimum downpayment ratio for first-time homebuyers from 30 to 20 percent. This move significantly boosted daily trade volumes in previously owned properties, surpassing the benchmark of 500 transactions per day.
The relaxation of housing policies since April has encouraged many previously hesitant homebuyers to enter the market. The National Bureau of Statistics (NBS) spokesperson, Liu Aihua, noted that the decline in sales of new homes narrowed in the first five months of the year, showing positive momentum.
Ken Ip, Chairman of the Asia MarTech Society and Chairperson of the PropertyGuru Asia Property Awards (Mainland China) judges, commented on the signs of recovery in China’s housing market. He highlighted that government efforts like easier down payments and buying unsold units are making property more accessible and reducing excess inventory. He emphasized the importance of gradual policy adjustments to avoid disrupting the fragile recovery.
Ip suggested that policies targeting affordable housing could broaden the buyer pool, while encouraging investment in other sectors lessens reliance on real estate. He also stressed the importance of transparency and consistent policies to rebuild trust and encourage long-term market participation.
The People’s Bank of China is providing USD 41.3 billion to address the inventory overhang, as the country grapples with approximately 60 million unsold apartments. This financial injection is expected to aid developers and stimulate the market, although Moody’s Ratings analysts caution that a sustainable sales improvement is unlikely given the modest economic growth outlook.
Ken Ip remains optimistic, emphasizing the importance of the government’s strategy for long-term stability. He noted that China’s recent property market stimulus package is laying the groundwork for a more sustainable future, focusing on reducing excess inventory and promoting financial responsibility.
Economists surveyed by Bloomberg anticipate a modest boost to China’s GDP from the recent property market support, with growth expected to improve by between 0.1 and 0.3 percentage points this year. The median forecast for growth in 2024 has edged up to 4.9 percent, reflecting cautious optimism about the impact of these policies.
Zhou Maohua, an economist at China Everbright Bank, noted that supportive policies will gradually take effect, tailored to fit the circumstances in individual cities. This approach is expected to shore up confidence and foster an industry-wide recovery, although time is needed for a full rebalance of supply and demand.
Amid these market shifts, the 10th edition of the PropertyGuru Asia Property Awards (Mainland China, Hong Kong, Macau) celebrated outstanding achievements in the real estate sector in 2023. New World China was named Best Developer (Mainland China), with development winners including Zhuhai Huafa Properties Co., Ltd. for Zhuhai Huafa Sky Hill Mansion and Shanghai Huafa Jing’an Mansion; Shun Tak Qiantan (Shanghai) Cultural and Real Estate Company Limited for New Bund 31; and Lead8 for MixC Nanjing.
China's real estate market is beginning to show signs of recovery due to targeted government support. While challenges remain, these initial green shoots suggest that the sector may be stabilizing. Continued policy adjustments and a focus on sustainable growth are essential to maintaining this positive momentum and ensuring long-term stability in the market.
