Over the weekend, China's property sector experienced a surge in home buying as hundreds of families in Beijing and Shanghai seized the opportunity created by relief measures. These measures, announced on Friday in the mainland's two most developed cities, expand the definition of "first-time" homebuyers, granting them access to more affordable mortgage loans and lower upfront payments.
Initial data from Centaline China Research revealed a substantial increase in transaction volumes in the primary and secondary property markets in Beijing and Shanghai. Compared to the previous weekend, Beijing saw a 100 percent jump, while Shanghai recorded a remarkable 200 percent increase.
Raymond Cheng, Managing Director at CGS-CIMB Securities, noted the encouraging response to these policy changes, stating, "We were surprised by the strong response post-policies, despite the challenging economy, which we think signals robust genuine housing demand in China."
Under the new policy, Beijing and Shanghai residents without property ownership in major cities became first-time homebuyers. Past credit records were disregarded, and certain categories of people, previously disqualified from being considered first-time buyers, were now eligible. First-time buyers benefit from a 35 percent down payment requirement (compared to 70 percent for second-time buyers) and a preferential mortgage rate that is 0.7 percentage points lower than the standard rate.
This policy shift follows similar moves in Guangzhou and Shenzhen, where the definition of first-time homebuyers was expanded to support the struggling property sector.
In response to these changes, property developers in Beijing and Shanghai experienced a surge in sales. One Sunac Opus in Beijing reported housing contract sales of 5.6 billion yuan ($770 million) over the weekend. In Shanghai, new flats at residential complexes like China Construction Jiuhai Yuntian and DahuaSplendid Four Seasons also saw strong demand.
However, some analysts cautioned that the buying spree might be short-lived, as many potential buyers remain cautious about the property market's outlook. The property sector still faces challenges, including other restrictions on home transactions and land supply, along with a declining growth outlook that is deterring potential buyers.
Lu Ting, Chief China Economist at Nomura Holdings in Hong Kong, commented that while the easing measures are welcome, they may not be sufficient to fully revitalize the property market. He suggested that more aggressive measures might be needed to achieve a genuine recovery.
The relief measures are expected to save mortgage borrowers up to 300 billion yuan annually, but the sector's challenges remain substantial.
By fLEXI tEAM