Shenzhen and Beijing lead way as sales pick up
Property sale volumes in major mainland cities began to recover in recent weeks after slowing in April.
According to CCB International Securities, weekly sales figures for May 7 to May 12 indicate that tier-one cites recorded average sales volume growth of 38.5 per cent week on week, with Shenzhen and Beijing witnessing a strong recovery from previous weeks.
Meanwhile, tier-two and -three cities saw average growth of 34 per cent, with only Fuzhou posting a decline, said CCB International, a unit of China Construction Bank. Dalian and Chengdu recorded the strongest sales growth of 74.8 per cent and 81.2 per cent week on week, respectively, among all the major cities. China Index Academy, a domestic real-estate research institute, reported a similar picture, with 29 out of the 40 cities monitored showing a rise in sales volume.
Property agent Centaline Property Agency said total sales volume in 54 cities monitored increased 12.6 per cent in the first 17 days of May, compared with the same period of time in April.
CCB International said the improvement was spurred by a relaxation of liquidity and pent-up demand.
An influx of large numbers of rural immigrants and graduates from other cities to bigger cities was generating high demand for housing, especially for first-home purchases and property upgrades, it said.
Encouraged by the supportive tone set by the People's Bank of China earlier in February, most banks on the mainland are still offering mortgages to first-home buyers at discounts at benchmark rates. Applications for home loans are moving in line with sales volumes, possibly driven by the flurry of new project launches, according to CCB International.
The recent cut in the required reserve ratio has given rise to a surge in liquidity that could help sustain the current low mortgage rate environment, it said.
According to CCB International's mortgage application survey, it found that mortgage lending rates were being offered at discounts in certain key cities, including tier-one cities and regional centres such as Chongqing, while in most tier-two and tier-three cities, mortgages were being set at benchmark rates. Sales would continue to recover, albeit at a slow pace, said CCB International.