China home sales see first monthly rise in 2024 on stimulus blitz
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The value of new home sales rose 7.1 per cent from a year earlier in October, reversing from a 37.7 per cent slump in September.
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BEIJING – China’s residential property sales rose in October, the first year-on-year increase of 2024, as the government’s latest stimulus blitz brought back buyers.
The value of new home sales from the 100 biggest real estate companies rose 7.1 per cent from a year earlier to 435.5 billion yuan (S$81 billion), reversing from a 37.7 per cent slump in September, according to preliminary data from China Real Estate Information. Sales surged 73 per cent from a month earlier.
The improvement came after China unleashed its strongest package of measures, including cutting borrowing costs on existing mortgages, relaxing buying curbs in big cities and easing down payment requirements.
That said, the recovery was lopsided, with state developers benefiting the most from the stimulus.
Home sales of six state-owned enterprises tracked by Bloomberg Intelligence rose an average 26 per cent, while falling 24 per cent for 13 private developers.
This uneven recovery underscores how transactions are skewed towards second-hand homes and those developed by state-owned companies due to the lack of fiscal support, Bloomberg Intelligence analyst Kristy Hung said in a note on Nov 1.
Analysts are expecting more policy support to ensure China’s roughly 5 per cent economic growth target in 2024. President Xi Jinping reiterated the need to hit that goal in the lead up to a key legislative meeting next week.
International Monetary Fund director Kristalina Georgieva has warned that China’s annual growth could drop to “way below” 4 per cent in the future without reforms to lift domestic consumption.
A years-long property crash has wiped out billions of dollars in household wealth, adding to deflationary pressures.
In late September, the trading hub of Guangzhou became the first Tier 1 city to remove all restrictions to buying residential property. The other top-tier cities – Beijing, Shanghai and Shenzhen – allowed more people to purchase residences in suburban areas, while letting some others buy more homes.
The People’s Bank of China also greenlit the refinancing of as much as US$5.3 trillion (S$7 trillion) of existing mortgages for millions of families.
Cash-strapped developers are counting on a sales revival to persuade debt holders.
China Vanke suffered another hefty loss in the third quarter, with its contract sales down 35 per cent in the first nine months from the same period a year earlier.
Country Garden Holdings also won bond-holder approval to extend onshore bond payments after failing to secure enough cash.
Separately, China’s central bank injected US$70 billion worth of cash into money markets this month via a newly established policy tool, in a step to ease liquidity stresses in the fragile economy and encourage banks to lend. BLOOMBERG
