China's rare policy support fails to spur Golden-Week holiday property sales

BEIJING - China's latest property policy package pushed out before a week-long holiday has not ignited a sales turnaround, underscoring the challenge to arrest the country's flailing real estate sector.

Residential transactions for the traditionally sales-friendly week plunged 38 per cent from a year earlier in 20 major cities, according to China Index Holdings.

That is despite the central government offering a series of rare policies, including allowing two dozen cities to temporarily reduce mortgage rates for primary residences by as much as they want.

The government also cut rates for housing provident fund loans for the first time in seven years.

In addition, the finance ministry approved refunds for personal income tax on housing upgrades, a tool not used since 2010.

Chinese property stocks climbed on Monday, bucking broader decline, as the weak property sales spurred hopes that Beijing will offer more supportive measures.

A Bloomberg real estate stock gauge increased as much as 1.7 per cent before paring the gains to 0.4 per cent.

Financial regulators have told the nation's biggest state-owned banks to extend at least 600 billion yuan (S$120 billion) of net financing to the property sector in the final four months of this year, Bloomberg News reported.

"The current housing-market slump may stop in October amid supportive policies," CRIC analysts led by Mr Yang Kewei wrote in an Oct 8 note.

"But a recovery may not emerge in the fourth quarter." BLOOMBERG