Property stocks enjoyed a two-day break from the market gloom after China’s real estate market announced its plans to boost sales. The rally is likely to be short-lived, however. According to some analysts, measures taken by property stockholders will have a limited effect on boosting up sales despite the difficult economic atmosphere.
On Wednesday, the Chinese government said that it would eliminate urban real estate tax and cut the transaction tax for properties owned for two years or less. They also said that they would encourage banks to extend credit lines for the development of mass-market housing.
Keppel Land and CapitaLand, major players in the property market, saw the biggest jump with their exposure to the mid-tier Chinese market. Shares of CapitaLand went up 16.6 percent yesterday while Keppel Land jumped 20.9 percent.
Yanlord Land Group, a major player in Chinese luxurious property market, on the other hand, rose in property stocks too. They rose on Thursday to 17.4 percent. However, their stock fell back 2 percent yesterday. Analysts say that these measures are for the mass only.
“As the overall policy still focuses on supporting the housing needs of the low to middle income homebuyers, high-end developers might not benefit substantially from these changes,” Carol Wu, DBS Vickers Securities analyst, said.
“While the policy environment has continued to improve, full recovery of the sector remains uncertain amid the deteriorating economic outlook,” she added.
Moreover, these measures, according to Leon Wai Ho, a Barclays Capital economist, are also meant to cushion a fall in demand rather than to engineer sales considering the expected rise in China’s unemployment rate.