New | China’s cities taking steps to pare record housing inventories

Starting from mid-February till the end of this year, home buyers in China’s third-tier city of Shaoxing in Zhejiang province will be given a tax refund from the local government of at least 0.8 per cent of the deal price.

It is part of the mainland’s nationwide effort to sell down record high housing inventory, an issue that is especially acute in small cities, where demand seems to have stalled amid a slowing economy.

The property market downturn was a drag on China’s economic growth by roughly 1.1 percentage points last year, according to investment bank J.P. Morgan’s estimate and many economists expect the authorities to intensify policy support this year, including a possible interest rate cut in the first half, to stabilise growth in the world’s No 2 economy at around 7 per cent.

That will help bring about a cyclical rebound of the housing market in the second quarter after bottoming out in the first quarter, according to the latest forecast from Hong Kong-based independent research and analytics firm Real Estate Foresight, who correctly predicted the trend in 2014.

“We may not yet be at the bottom of the cycle but there are more and more signs of upcoming cyclical pickup in volumes and later in prices,” said Robert Ciemniak, the company’s founder and chief executive officer.

Others are less optimistic. Li Junheng, head of research at New York-based JL Warren Capital said: “According to our primarily home market tracking data and conversations with developers, we believe that the downward momentum continued and will likely accelerate in the first quarter of 2015 if the anti-corruption investigation deepens among the developers.”