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Realty sector looking up on policy moves

Expert says that worst time for home transactions has passed, sales rebound

By WANG YING in Shanghai | China Daily | Updated: 2024-06-12 07:16

Potential homebuyers ask queries on housing projects at a real estate agency in Beijing in March. [JIANG QIMING/CHINA NEWS SERVICE]

The latest local housing fine-tuning policies are taking effect with improved market activity in major Chinese cities, leading to expectations of more innovative solutions to better digest inventory and stabilize the property market, said industry experts on Tuesday.

"In the new home market, about 1,302 apartments were traded on average per day among the key 13 cities, soaring 172.54 percent (or 478 units per day) from that seen during the May Day holiday," said the Zhuge Real Estate Data Research Center.

"The significant increase comes after the epic supportive measures at the State level on May 17 and various local level fine-tuning moves, indicating that policies were effective in driving buying demand and promoting transactions," said Guan Rongxue, a senior analyst at the Zhuge Real Estate Data Research Center.

During the three-day-long Dragon Boat Festival that ended on Monday, Shanghai's residential property sector saw upbeat sentiment among potential buyers as both daily inquiries and visits made for existing homes rose 30 percent from the days before May 27, when a nine-item policy was released by the local municipal government, said the Shanghai Lianjia Research Institute.

"Since Shanghai announced measures to further free up the housing market in late May, our workload grew 40 to 50 percent due to soaring inquiries and visits from potential clients, and the trend continued during Dragon Boat Festival," said Yang Chen, an agent with Sinyi Realty in Shanghai's Jing'an district.

Yang said he also discovered an evident increase in buying budgets, showing their optimism toward market prospects.

"Before the new policies, many clients preferred to buy homes without applying for mortgages, as they did not want to sacrifice their living standards. But now, more people want to apply for loans as mortgage rates and down payments have been downward adjusted," Yang added.

"These new measures have precisely targeted rational home buying demand in the market, including inelastic demand and reasonable requirements for changing to better homes," said Lu Wenxi, a market analyst at Centaline Shanghai.

Shanghai expressed its strong support for the local housing market on May 27 by announcing measures to scrap some purchase restrictions, optimize credit policies, encourage trade-in activities and improve land and housing supplies. These measures are in response to the letter and spirit of the Political Bureau of the Communist Party of China Central Committee meeting on April 30.

Lu expects Shanghai to see double-digit transaction improvements in June from the previous month, and transaction volume in the second half will be better off than the first.

"The worst time for home transactions has passed," said Lu.

In the five key cities Zhuge Real Estate monitored, a total of 933 pre-owned flats were traded during the Dragon Boat Festival period, up 40.72 percent from a year ago, and surging 232.98 percent per day in comparison with the May Day holiday, said Guan.

"The executive meeting of the State Council — the country's Cabinet — was held on Friday, which further raised market expectations for more innovative measures to digest inventories, boost market confidence recovery and activate transactions in June," Guan added.

By identifying the significance of the property market toward people's overall sentiment, the meeting called to fully understand the new situation of supply and demand, follow the expectations of the public for high-quality housing, promote the implementation of supportive policies, and continue to introduce new measures to destock and stabilize the market.

The goal is to accelerate the formation of a new property development model, improve the housing supply system, and promote the steady and healthy development of the real estate market, the meeting said.

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