An unexpected interest rate cut announced by the People's Bank of China on Thursday is almost certain to help a fragile recovery in the mainland's property market, analysts say, as they predict further gains for property stocks in the coming months.
But they warned that any potential rise in housing prices could spark a swift response from the central government in the form of another round of measures to cool the sector.
'After a lukewarm start to the year, listed mainland developers saw property sales pick up, with most reporting stronger contracted sales in June,' said property analyst Alan Jin, of Mizuho Securities Asia, yesterday.
Supported by pent-up demand, China Vanke, the mainland's biggest property developer by market value, said on Wednesday that contracted sales reached 13.3 billion yuan (HK$16.34 billion) last month, a 24 per cent jump from May. Longfor Properties reported a day later that June sales rose 35 per cent month on month from May to 4.54 billion yuan.
The PBOC said it was cutting the one-year lending rate by 31 basis points to 6 per cent and the one-year deposit rate by 25 basis points to 3 per cent, with immediate effect.
This is the second rate cut in a month, following a cut on June 7, and lifted property shares yesterday.
In Shenzhen, China Vanke rose 3.88 per cent to 9.65 yuan per share.