New | China’s luxury homes will be hit by stock market fluctuations,say analysts
China’s property sales recovery may be affected if stock markets remain volatile, especially after the recent large correction from a 7-year peak hit in June, say property analysts.
“The sluggish stock markets may drag home sales in the medium term and the luxury market may be hit hard following the sales surge in the first half of 2015,” said Edison Bian, head of China Property Research at UOB Kay Hian (Hong Kong).
But in the short term, the negative impact on housing markets due to the diminishing wealth effect could be limited, thanks to the recent sales recovery driven by end-users’ upgrading demand, he said.
He expected sales momentum would take a break in July and August before rebounding.
“July is traditionally a low season for property sales because of the hot weather, while developers normally limit new launches after an intensive period of offering new projects in May and June to meet half-year targets,” said Bian.
China equity markets have reeled from a massive sell-off which have knocked off over US$3 trillion in value from shares in Shanghai, Shenzhen and Hong Kong.
Lee Wee Liat, managing director, regional head of property research, BNP Paribas, is more optimistic.
“Despite the volatile stock markets, the housing markets in some cities such as Shanghai and Shenzhen remain stable because there is a shortarge of home supply in these cities,” said Lee.
