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Summer Zhen

Chinese cities suffering from a high inventory of unsold homes have recovered faster than expected due to central government easing measures. Hangzhou is one of them.
Transactions in Hangzhou, where once to there was the highest stock among the second-tier cities, have picked up quickly this year.
Longxi, a new residential project in the Gongshu district and developed by The Wharf (Holdings), sold out the first batch of nearly 90 units of flats in just one hour in April. Average prices were about 25,000 yuan (HK$29,768) per square metre.
The company is preparing to launch sales of another batch this month, and selling prices have risen to 28,000 yuan per square meter.
At the sales centre of Longxi, the South China Morning Post found even though it was a work day, there continued to be visitors coming to the project.

“Over the weekend, we have more than 100 groups of guests per day,” said Yan Di, a sales representative.
According to Yan, the project has attracted many buyers outside Hangzhou, people from places such as Shanghai, where recently announced stricter home-buying policies resulted in demand overflow. Sellers don’t provide discounts as they are not worried about sales.
At a similar development nearby — Jingrui West Mansion — prices have jumped by nearly 10,000 yuan per square meter since last November. The developer has even slowed its launch schedule to raise the price premium as it is very optimistic about the market outlook in Hangzhou.
“The supply-demand balance has improved in Hangzhou because the government launched fewer land sales last year. We expect the home prices to rise 15 to 20 per cent this year,” Philip Xu, general manager at Jing Rui estate (Group) Hangzhou company, said.
The supply-demand balance has improved in Hangzhou
Philip Xu, general manager at Jing Rui estate (Group) Hangzhou
Xu added that Hangzhou’s economy is supported by a successful industry transformation and upgrading. Alibaba Group, which headquartered in Hangzhou and owns the Post, is the best example. It has drawn many young people to settle in Hangzhou. Furthermore, the anticipation of Hangzhou to host this year’s G20 Hangzhou Summit and 2022 Asian Games would support home prices in the city into the longer term.
The home inventory has dropped considerably even in the suburban Yuhang district, an area that accounts for 40 per cent inventories of the city.
Transactions have increased since February, sales staff for a project named Zhonggang Luolan Town in Yuhang said. They said they had sold more than 100 units in April alone. The project once suffered weak sales last year and the prices were as low as 4,988 yuan per square metre. The average selling prices now are up to 6,800 yuan per square metre.
Official data shows new commercial home sales in Hangzhou surged 115 per cent year-on-year in terms of floor area in the first quarter of 2016.
Hangzhou is just a microcosm of the ubiquitous warming up of Chinese second- and third-tier cities.
Jeffrey Gao, head of China Property Research at Nomura, said the saleable resources in 16 second-tier cities tracked by Nomura is now equivalent to eight months of sales, compared with a peak of 15 months at the end of 2014.
“The effect of destocking is better than expected,” Gao said. “The property market in second-tier cities is pretty healthy now. No worries about oversupply.”
While third-tier cities still need further government measures to help reduce inventories, its saleable resources has also declined to 27 months from previous 40 months, according to Nomura.
Gao said central bank cuts on down payment requirements and mortgage rates were the key reasons for increased sales.
Average first home mortgage rates fell to a record low of 4.52 per cent in April, financial data provider Rong360 said.


China’s home sales are recovering faster than expected 

A cyclist goes past advertising for a development in Hangzhou’s Gongshu district. Led by The Wharf (Holdings), it sold out the first batch of nearly 90 units of flats in just one hour in April. .Photo: Summer Zhen

HANGZHOU10 - Sales center of Longxi. SCMP Pictures (UNDATED HANDOUT)

Business

Property

Hong Kong & China

Government measures on down payments and mortgages are seen to be helping cities such as Hangzhou which had suffered oversupply of housing stock.


China’s home sales are recovering faster than expected

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Government measures on down payments and mortgages are seen to be helping cities such as Hangzhou which had suffered oversupply of housing stock.

Government measures on down payments and mortgages are seen to be helping cities such as Hangzhou which had suffered oversupply of housing stock.