NewChina’s property sales seen to rise on policy relaxation as developers destock

Mainland China’s property sales are expected to pick up this month after a weak February as policy relaxation warms up buyers’ sentiment and encourages developers to redouble destocking efforts, analysts said.

The People’s Bank of China cut interest rates earlier than expected last week, the second time it has done over the last three months.

“More supportive policies will come out in the pipeline to boost residential transaction volume,” said Lee Wee-liat, head of property research at BNP Paribas.

He added that mainland banks would lower mortgage rates more than the benchmark cut of 25 basis points as they were becoming increasingly willing to offer discounts.

A survey by Rong360, a mainland financial product search engine, found Bank of China, Huaxia Bank and Agricultural Bank of China increased mortgage rate discounts to 12 per cent after the Lunar New Year from the previous 10 per cent. They maintained the level after the rate cut.

However, it found that HSBC lowered its discounts to 10 per cent from 12 per cent previously in Guangzhou and Shenzhen after the rate cut, adding that liquidity stayed ample in first-tier cities.

“I don’t see a significant collective increase in banks’ exposure to the property sector,” said Liao Qiang, senior director at global ratings agency S&P.