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
Meghna Infracon Soars with Launch of Luxurious Residential Project in Mumbai
Meghna Infracon's new residential project, Rivaan, in Goregaon, Mumbai, sends stock soaring 19%. Real Estate, office spaces, Commercial Real Estate.
Unlocking Opportunities: Multiple Triggers Ahead for Affordable Housing Finance Companies
With the Union Budget around the corner, investor interest in Affordable Housing Finance Companies (AHFCs) is on the rise, driven by expectations of measures to boost the affordable housing market.
Has RERA Improved the Indian Real Estate Sector?
We explore the impact of RERA on the Indian real estate market and whether it has lived up to people's expectations.
Understanding FII Selling: Anand Rathi Wealth’s Feroze Azeez Shares Insights
Feroze Azeez from Anand Rathi Wealth provides a detailed analysis of how investors should interpret the Foreign Institutional Investors (FII) selling in the market. Discover key factors and strategies to navigate this trend.
Property Prices See Uptick in Top Urban Centers: Report by IBEF
A recent report by the India Brand Equity Foundation (IBEF) highlights a steady rise in property prices across India's top eight cities. Despite market cooling trends, the long-term outlook for the Indian real estate sector remains robust, offering numero
Narayana Murthy's Luxurious Real Estate Deal: A Billionaire's New Home in Bengaluru
Infosys co-founder Narayana Murthy acquires a luxurious apartment in Bengaluru's Kingfisher Towers for Rs 50 crore. Find out how much he paid for the sprawling 8,400-square-foot property.