China property shares surge on easier home purchase rules, improved sentiment
By Clare Jim
HONG KONG (Reuters) -Shares of China’s property developers soared on Monday, with broad double-digit gains, as investors cheered easier home purchase rules in major cities and Beijing’s latest burst of stimulus to boost confidence in the depressed sector and the economy.
China’s Politburo pledged last week to strive to achieve the 2024 economic growth target of roughly 5% and halt declines in the housing market, two days after the central bank unveiled its biggest stimulus since the pandemic.
Hong Kong’s Hang Seng Mainland Properties Index jumped more than 8% by mid-day, and the mainland’s CSI 300 Real Estate index rose 7.6%.
The Hong Kong sub-index has surged 40% since last Tuesday following the central bank’s latest economic support measures.
“It’s really a big turnaround, the policies are so intensive, we have never seen such clear instruction to stop housing prices declining and support the stock market,” said Dickie Wong, executive director of research at Kingston Securities.
Guangzhou on Sunday became the first top-tier city to lift all restrictions on home purchase, while Shanghai and Shenzhen said they would ease curbs on housing purchases by non-local buyers and lower the minimum downpayment ratio for first homebuyers to no less than 15%.
Spurred by the supportive measures, some new launches in major cities led by Shanghai were quickly sold out, according to media reports, while some developers decided to increase the selling price of their projects.
Major privately owned developer Longfor Group said in a statement its new flats worth 1.5 billion yuan ($213.90 million) in a Shanghai project were sold out within two hours on Friday, and its project in Hangzhou sold 214 flats on the day of the Saturday launch – more than 90% of the total – and raised 1 billion yuan.
The Beijing-based developer also said one of its projects in the capital city recorded much faster sales since last Tuesday after the central banks’ stimulus package, and it plans to raise its selling prices after promotional activity during the week of national holidays starting on Tuesday. The developer didn’t provide further details.
Some small local developers including Henan Zhuokai and Chengdu Jiahe have already raised their selling price by 2% in the past few days, local reports said, after state-owned developer Poly Developments tried to boost buyer confidence with a conditional refund guarantee.
The three developers could not be reached for comment.
JP Morgan said the market will need to see sustainable sales recovery for more than two months to confirm it is really bottoming out.
“We saw similar market reactions in previous easing episodes. Unfortunately, the uptick in market sentiment mostly turned out to be short-lived,” it said in a research report.
CONFIDENCE-LED RALLY
Still, investor optimism drove up property stocks, with Shenzhen-based Kaisa Group and Fantasia up sharply by 50% and 35% on Monday, respectively, while Guangzhou-based R&F Properties rose 25%.
Vanke shares in Shenzhen were up 12.9%, and Shanghai-listed Greenland and Poly increased 10% and 7%, respectively.
China’s central bank separately said on Sunday it would tell banks to lower mortgage rates for existing home loans before Oct. 31.
“We see it as a good and swift start to achieving the central government’s target,” CLSA said of the easing in a research note.
“We expect more liquidity injections from central government to help destock the property market and thus fix the oversupply issues, which takes time,” it added.
The brokerage expected the property market to bottom out in the second half of 2025.
($1 = 7.0125 Chinese yuan renminbi)