China's Property Sector Sees Uneven Recovery Amidst Government Support Measures
China's latest property support measures have boosted transactions in its biggest cities, but activity in smaller localities is struggling to get off the ground.
ChinaProperty MarketReal EstateMortgage RatesDownpaymentsEconomic GrowthGdpReal EstateJun 18, 2024
The government's decision to cut minimum mortgage rates and downpayments, and instruct municipalities to buy unsold apartments to turn them into social housing, has sparked a flurry of policy easing announcements from cities across the country. However, data from real estate research firm China Index Academy shows that the measures have had an uneven impact, with transactions in Shanghai and Beijing rising, while sales in smaller cities are still weak.
Analysts say that the government needs to direct more funds to smaller city governments to reduce inventories and stabilize those markets. However, most expect gradual support rather than any big-bang measures, as authorities are wary of bailing out profligate developers.
The property sector, which contributed nearly a quarter of gross domestic product before it slipped into crisis in 2021, remains a major drag on the $18 trillion economy. The downturn may have further to run, especially in smaller cities where the quantum of excess supply is far greater than in larger cities, keeping pressure on policymakers to extend more support.
In Shanghai, one agent said inquiries for apartments have tripled since the city relaxed downpayment requirements on May 27, and noted 700-900 sales a day versus 500 previously. Another agent said home viewings increased 60%. One agent in Beijing said viewings in the capital also increased \
Frequently Asked Questions
What measures did the Chinese government take to support the property sector?
The government cut minimum mortgage rates and downpayments, and instructed municipalities to buy unsold apartments to turn them into social housing.
Which cities have seen an increase in transactions?
Bigger cities like Beijing and Shanghai have seen an increase in transactions.
Why are smaller cities struggling to revive demand?
Smaller cities have a long-term structural oversupply problem that's more difficult to resolve, and buyers are still wary of cash-strapped developers.
What do analysts expect from the government in terms of support measures?
Analysts expect gradual support rather than any big-bang measures, as authorities are wary of bailing out profligate developers.
What is the outlook for the property sector in the long term?
The property sector is expected to remain a drag on small city economies in the long term, weighing on tens of millions of consumers and posing risks to small regional banks.
Related News Articles
Property Registration Scandal: 796 Documents Under Scrutiny for Violating Real Estate Laws
The registration department is investigating 796 property registration documents for non-compliance with real estate regulations, sparking concerns among developers and buyers.
Maharashtra Weather Alert: Heavy Rainfall Expected in Mumbai, Pune, and Other Districts
IMD issues yellow alert for Mumbai, red alert for Palghar and Pune; heavy to very heavy rainfall expected in the next 24 hours
Nagpur Townships Inspected by State-Appointed Panel, Issues Persist
A state-appointed panel inspected several townships in Nagpur, Maharashtra, but issues related to water supply, irrigation clearance, and inspection delays remain unresolved.
Indore Sees 12.8% Rise in Property Revenue During Festive October
The city of Indore recorded a significant 12.8% increase in property revenue during the festive season in October. According to Balkrishna More, the Deputy Inspector General of Registration for the Indore region, the surge in real estate activity can be a
Arvind Gurumurthy: A Renowned Legal Expert in M&A, Private Equity, and Corporate Law
Arvind Gurumurthy, a distinguished legal professional, has made significant contributions in the fields of M&A, private equity, and corporate law. With a successful seven-year tenure as Partner at Kochhar & Company, Arvind has extensive experience in hand
Arthur Laffer Buys $87,156 in NexPoint Diversified Real Estate Trust Stock: A Bullish Signal?
Arthur Laffer, the director of NexPoint Diversified Real Estate Trust (NXDT), has made a significant purchase of $87,156 in company stock. This move could signal his confidence in the company's future performance. Investors should consider this as a potential indicator of a bullish market play.