China property support moves spur buying spree in Beijing and Shanghai, but concerns swirl demand may not be sustained
- Beijing and Shanghai nod to more ‘first-time’ homebuyers, allow them cheaper mortgage loans, lower upfront payments
- Aggregate transaction volumes in the primary and secondary markets in the two cities jumped by 100 per cent and 200 per cent after the move
The mainland’s two most developed metropolises announced on Friday that more residents would qualify as “first-time” homebuyers, giving them access to cheaper mortgage loans and borrow with lower upfront payments.
Aggregate transaction volumes in the primary and secondary markets in Beijing and Shanghai jumped by 100 per cent and 200 per cent, respectively, compared with the previous weekend, according to initial data from the Centaline China Research.
CGS-CIMB Securities managing director Raymond Cheng said it was an encouraging response to the policy moves.
“We were surprised by the strong response post-policies, despite the challenging economy, which we think signals robust genuine housing demand in China,” he said in a research note on Monday. “In our view, the regulators appear decisive in helping the sector as both policies will be implemented immediately.”
Beijing and Shanghai residents, who do not own property in major cities became first-home buyers on Saturday as authorities looked past their previous credit records. In the past certain categories of people who had taken out a mortgage – even if fully repaid – were disqualified from being considered first-time homebuyers in major cities.
Shanghai and Beijing followed Guangzhou and Shenzhen, which have broadened the definition of first-time homebuyers to bolster the beleaguered property sector.
New World’s China unit reports US$1.37 billion in home sales
The Post has learned that new home sales in several residential projects in Beijing and Shanghai attracted solid demand on Saturday and Sunday.
In Beijing, One Sunac Opus raked in housing contract sales of 5.6 billion yuan (US$770 million) at the weekend after 169 of its 350 units found buyers.
In Shanghai, new flats at two residential complexes – China Construction Jiuhai Yuntian and DahuaSplendid Four Seasons – also saw strong demand with each project concluding dozens of deals, according to Thepaper.cn.
In the secondary market, some homeowners raised their asking prices following the policy easing, according to You Liangzhou, the owner of Baonuo, a property agency in Shanghai.
“Homeowners felt elated that the easing measures could lead to higher transaction values [for their units],” he added.
No data was available from Guangzhou and Shenzhen due to the strong typhoon over the weekend.
But some analysts warned the buying binge could be short-lived as many potential buyers were sidelined. A gloomy outlook will still overshadow the property sector because most would-be homebuyers are now sitting out the buying euphoria on fears a residential market downturn has not run its course.
“The impact could be small and short-lived,” he said. “Though these easing measures are very welcome, they are definitely not enough to turn things fully around. Beijing may have to introduce more aggressive property easing measures to deliver a real recovery.”
