China’s Property Market Recovers as Deals Surge in October

Chinese government’s efforts to revive its ailing property market by announcing stimulus on October 17 seems to have paid off as home sales in major Chinese cities have shown growth this month.

China’s Housing and Urban-Rural Development Ni Hong along with other officials said that the government will provide $561 billion to help the housing sector by end of year and they heaved a sigh of relief with the market responding to the stimulus.

The struggling property sector has witnessed over 50 companies, accounting for about 40% of home sales have defaulted since 2020 casting a shadow on the growth of China’s economy leaving the cash-strapped developers and high inventories of unsold homes and unfinished projects in the lurch.

Authorities in the cities of Beijing, Shanghai, Guangzhou and Shenzhen emulated the Government’s plan by introducing their versions of stimulus measures for local housing markets just before the National Day holiday.

These measures have boosted the homebuyer sentiment in big cities as buyers returned to the market.

New home transactions in 15 Chinese cities surged by 24% in the second week of October to 24,287 units, according to data from Lingping Real Estate Data Research Institute, from a week earlier. Secondary home transactions rose by 20% to 20,724 units, the data showed.

According to media reports, 744 customers signed up to vie for 332 flats in a Shenzhen housing project on Sunday, and all the flats were sold out in three and a half hours, indicating the spurt in demand.

The reports, quoting Leyoujia, a housing agency in Shenzhen, said that the conversion rate of home buyers for new homes — the ratio of finalised deals to all customers who have visited a real estate project — jumped from a meagre 2% to 12%.

Shenzen’s Record

During the National Holiday, buyers in Shenzhen signed initial purchase contracts for 1,841 new homes, up 664.1% from a year earlier, local data showed. Meanwhile, homebuyers signed contracts for 2,316 second-hand homes last week, a weekly transaction record in nearly three years, according to housing agency Leyoujia, the reports said.

In Guangzhou, capital of south China’s Guangdong Province, homebuyers had signed initial purchase contracts for 6,687 new homes, up 137% y-o-y, after home purchase restrictions were lifted on September 29, the Guangzhou Municipal Housing and Urban-Rural Development Bureau said while which attributed the strong growth to policy incentives and sales promotions by developers.

The secondary market in Shanghai has recorded more than 20,000 transactions so far this month, a month-on-month jump of 52.3%, according to data published by Shanghai Real Estate Trading Centre on Sunday. On Saturday alone, 1,301 deals were transacted, the second-highest daily figure this year, the data showed.

The market also started heating up in Beijing as the number of second-hand home transactions here nearly doubled from the previous month and surged more than 150% y-o-y from October 1 to 15, according to Leng Hui, an analyst with the research institute of Lianjia, a major second-home realtor.