A year following China’s introduction of a powerful stimulus to motivate home buyers to take out mortgages in a distressed property market, property sales may get a boost from news that the government will take out some of those measures before the year ends.
On the other hand, such government initiatives have pressured Chinese property developers’ traded shares in Shenzhen, Shanghai and Hong Kong in the past few days.
Most of the major cities in China have reported an increase of between 26 percent and 96 percent in October home sales from a year earlier, said Credit Suisse in a report released on Tuesday. The increase was aided by a rise in the volume of launched projects and strong demand during the holiday period.
“While it isn’t a major surprise to see such year-on-year jump, given last year’s property market downturn, it should be interesting to note that some cities such as Shenzhen and Hangzhou also managed to post a positive growth when benchmarked with the 2007 level,” said analysts from Credit Suisse in the report.
“With recent news regarding the potential change of mortgage interest rates for first-time buyers … this may induce home buyers to make an early entrance into home purchasing. Developers also started to focus more on volume [sales] in light of potential macro tightening in 2010.”
The property market in China has observed a significant turnaround since Beijing announced a raft of measures to sustain sliding transaction volumes and prices in October 2008, which included a reduction in property transaction taxes and reduction in mortgage rates for new home buyers.
Since then, property prices have picked up, while sales for both existing and new homes have soared.
Based on a data released recently by the National Bureau of Statistics, in the first nine months of this year, indexes of sales price of 70 medium- to large-sized buildings in mainland Chinese cities have increased by 2.8 percent from a year earlier.
While the total sales of residential buildings surged by 46.4 percent, the total investment in real-estate development climbed by 17.7 percent to 2.51 trillion yuan ($367 billion).