Real estate agents are feeling the change after both Beijing and Shanghai adopted a policy to recognize households with mortgage records but no local property ownership as first-time homebuyers, making them eligible for favorable down payments and lower mortgage rates. The measures were announced on September 1. So far, more than 20 cities, including the four tier-one cities, have adopted the new policy on identifying first-time homebuyers. Various regions have also introduced a combination of encouraging policies, such as selling-old-for-new schemes, tax subsidies and reduced mortgage interest rates. According to realty market analysis provider China Index Holdings, after the policy implementation, since late August, nationwide willingness to purchase real estate has increased by 15 percentage points, with significant improvements seen in Beijing, Shanghai, Guangzhou and Shenzhen, where the first two saw increases of around 20 percentage points each.
In the week following the announcement of the measures, Beijing witnessed a 16.9% weekly increase in the new home sales area to 103,000 square meters. Shenzhen saw a 3.8% weekly rise to 38,000 sq m during the same period, according to China Index. Experts said recent policies are buoying up market sentiment and helping drive transactions for both new and pre-owned homes, which in turn supports the troubled real estate sector to recover and contributes to the overall economic rebound. “Various favorable policies have been successively introduced of late, like reducing down payment ratios, lowering mortgage interest rates and adjusting eligibility criteria for first-time homebuyers.
These measures are very conducive to reducing the costs associated with buying homes and increasing enthusiasm for buying residential property in the future,” said Yan Yuejin, Research Director of Shanghai-based E-House China Research and Development Institution. “China’s real estate market is showing some positive signs of a steady recovery. This may help boost sales during the traditional peak period of September and October,” Yan said. Moreover, Chinese lawmakers will not consider levying property tax, which means, Yan said, the tax, possibly dampening the market sentiment at least temporarily, will not appear in the plan for legislation for at least three years. Property taxes weren’t mentioned in the recently released legislative plan by the National People’s Congress (NPC) Standing Committee on September 7. This, together with the recent stimulus policies, will help increase property deals and stabilize the real estate market, which will provide a boost to the national economy, he said.
Hong Kong-listed developer Sunac China Holdings saw the transaction volume in its real estate project One Sunac Opus, located in Beijing’s Chaoyang district, reach CNY5.62 billion with the sale of 169 homes on September 3, the opening day. The homes were sold for more than CNY30 million each, with per-house areas ranging from 215 to 291 sq m. The next day, Sunac’s shares saw a 34% jump in Hong Kong, leading gains in the sector. The company saw a total of over 110% growth between September 4 to 6. Some other real estate developers, including Country Garden, all saw share price increases.
“New home transactions have been unexpectedly brisk. Homebuyers I serve are mostly young couples expecting to purchase their first home in Beijing and second-time buyers looking to improve their living conditions,” said Li Chao. She currently manages sales of a new housing project located in northeastern Beijing. Pre-owned home sales also saw a rise in major cities. Around 5,000 pre-owned homes were sold in one week in Beijing, nearly half of August’s total, according to realty agency Centaline Property.
The situation in Shanghai is quite similar, as families are keen to look at available properties that allow children to attend good schools. Yang Jiarong, Manager at a Shanghai office of Sinyi Realty, said, “We have seen a 20% to 30% increase in appointments made by prospective homebuyers. There is also an increase in transactions.” “Regardless of how Shanghai’s real estate market evolves, it consistently records a monthly transaction volume of at least 10,000 units, maintaining its position as the top city in terms of transactions among the four traditional first-tier cities. From the government’s perspective, it continues to ensure the stability of the real estate sector. Therefore, relatively speaking, I believe that opportunities have always been present,” she said, as reported by the China Daily.
