Analysts rule out quick boost to property sector
Peggy Sito and Fulton Mak
Beijing's stimulus package is unlikely to boost the property sector right away, although the market will benefit over the medium term once the economy improves, analysts say.
'Take a look at the measures: we do not see any particular one item focusing on the private property sector. All of them are aimed at boosting the domestic economy,' said JP Morgan analyst Raymond Ngai.
'[But] the real estate sector will still benefit from it indirectly. Once the mainland economy improves and local consumption grows, buyers' confidence will be restored and they will re-enter the market.'
On Sunday the central government said it would ease credit, cut taxes and launch a massive infrastructure spending programme to boost the domestic economy.
The package, estimated to cost 4trillion yuan (HK$4.54 trillion), would be spent in the next two years on 10 major areas, including lowincome housing, rural infrastructure, transport and improvement in water and electricity supply.
Lee Hing-yin, the director of research and consultancy for East China at Colliers International, said although the measures aimed to stimulate domestic consumption, the property market would benefit once the economy stabilised.
The reform of the value-added tax and easing of bank loans would improve the business environment and could indirectly stoke office demand.
The rural reform was good news for small developers in particular, while the massive infrastructure investment would directly benefit the property market's logistics segment.
'The government's spending alone will unlikely pull investment of the overall housing sector,' said Wang Tao, the head of China economic research at UBS.
Mr Wang said investment in the housing market was critical to boosting domestic demand, so the government would have to increase supply in the lower-end and middle segment of the market.
'The latest stimulus package had a psychological impact on the market, but it did not have an immediate effect on the sector, so far,' said Andy Lee, the general manager of Centaline (China) in Shenzhen.