Chinese developers are speeding up project launches, sensing a turning point in sentiment among homebuyers, after several rounds of policy support from the central government helped fuel demand and temper a slide in property prices.
Some 115 projects offering a total of 44,577 homes were approved for presale in the November 3 week, according to data compiled by 58 Anjuke Real Estate Research Institute, which tracks activity in 55 mainland cities, 30 per cent more than in the preceding week.
The nation’s top 100 developers sold 435.5 billion yuan (US$60.2 billion) worth of homes in October, 73 per cent more than in September, according to China Real Estate Information Corp. Home prices fell 0.5 per cent over the same period, the smallest drop since March, government data showed.
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“There is great enthusiasm,” said Wei Kai, a marketing director at Centaline Property’s Shenzhen branch, one of the largest property agencies. “Sentiment is improving, so everyone is keen to launch their projects as soon as possible.”
The central government followed up on its September stimulus blitz by amending the deed tax structure on December 1. It will lower the cost of ownership and widen the access to bigger homes for more people. China will amend taxes on residential transactions to lower the cost of ownership and motivate a larger pool of buyers.
In Shanghai, at least five projects are being fast-tracked for sales from their initial plans, according to You Liangzhou, the owner of Baonuo, a property agency in the nation’s main financial hub. The builders expect buyers to go for bigger units after the new tax policy, he added.
China Overseas Land & Investment collected 8.5 billion yuan on Friday when it sold all 552 units on offer at Avant, its premium housing projects in Shanghai. Some 1,556 buyers competed for the units, the highest subscription rate this year.
The property sector generated one-quarter of China’s economic growth before Beijing’s “three red lines” policy to curb excessive borrowings by weak developers triggered a record amount of bond defaults. A full-blown Covid-19 pandemic later combined to hurt the economy, slamming consumer confidence and spending.
China’s economy grew 4.6 per cent in the third quarter, slowing from 4.7 per cent in the preceding three months, according to the statistics bureau. That is below the official 5 per cent annual target.
Hongrongyuan Property Group is ahead of schedule to put another 87 four-bedroom units for sale at Metropolis, a project located in the city’s Baoan district in Shenzhen, the tech hub in southern Guangdong province. That is within a month of its previous round of sales.
At least four more new projects are expected to enter the market in Shenzhen in the next two months, according to Wei, the marketing director at Centaline.
The new-found exuberance among homebuyers may not last. China’s economy is still challenged by weaker income growth and confidence in many debt-laden developers.
“Homebuyer sentiment continues to be impaired by a slowdown in economic and income growth and lingering concerns about project incompletion,” global rating firm Moody’s Ratings said in a report on November 11.
October’s strong sales performance has helped shrink the outstanding stock of new homes, according to China Real Estate Information Corporation, which tracks data in 28 cities nationwide.
Some 6.2 million square metres are expected to become available in November, a decline of 9 per cent from October and 52 per cent from a year earlier, it said. Supply in four tier-1 cities of Beijing, Shanghai, Guangzhou and Shenzhen is forecast to drop by 25 per cent and 59 per cent, respectively.
“The market has digested the pent up demand in October and absorbed many of the units ahead of time,” said Ding Zuyu, executive director and CEO of the Shanghai-based E-house Research Institute. “Most cities we tracked are expected to experience tighter supply in November, with month-on-month decline within 20 per cent.”
More from South China Morning Post:
- China unveils new tax breaks to boost property sales, free up household cash
- China’s new home prices slow 17-month decline after support measures kick in
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