Hangzhou home sales reach 5-year high as policy eases

Policy relaxation pushed new home sales to their highest level in more than five years in Hangzhou, the first city on the mainland to be hit by the property downturn.

Sales also rebounded last month in other major cities such as Beijing and Shanghai, after the central bank reversed its tightening policy on the property sector at the end of September.

"Transactions will improve in the near future but prices will remain at the current levels and are not likely to surge," said Lu Qilin, a research head at consultancy Shanghai Deovolente Realty.

Its data showed home sales in Shanghai jumped 42.5 per cent from September to 1.1 million square metres.

Hangzhou, where the country's crucial property market started to crack in February, saw new home transactions jump 35 per cent from September to 12,832 units, the highest since July 2009.

"With such a big transaction volume, an inventory of 140,000 units is just a paper tiger," said the research institute under Hangzhou Jointfounder Information Technology, which provides local data.

"In the main urban districts where inventory is small, particularly in areas where price correction has been full or growth potential is good, the possibility of a pickup in price is rising.

"Many developers have narrowed their discounts and may follow with a small increase in prices."

On its list of top developers in Hangzhou, Longfor Properties ranked first with sales revenue of 1.8 billion yuan (HK$2.28 billion), followed by Greentown China Holdings and China Vanke.

Media reports said the market recovery might break an agreed equity deal by Hangzhou-based Greentown founder Song Weiping to sell part of his stake to Sunac China Holdings.

Neither company replied to queries from the South China Morning Post.

Sunac shares closed 2.68 per cent higher yesterday at HK$6.89 while Greentown rose 5.33 per cent to HK$8.50. The Hang Seng property sub-index edged up 0.03 per cent.

Data from HomeLink, the largest property agency in Beijing, showed primary home transactions in the capital rose 20 per cent last month from September to 9,550 units.

Another consultancy E-House (China) said home transactions surged 55 per cent in Guangzhou and 42 per cent in Shenzhen.

Private surveys showed average home prices on the mainland continued to edge down but at a slower pace in month-on-month terms. Prices were also down in year-on-year terms.

Vice-Minister of Housing Qi Ji told an investigation team from the State Council that home prices would continue to trend down in the next few months, but the decline would be gradual.