The “bazooka” activated by the Chinese authorities to revive the real estate sector is having its first effects, with an improvement in sentiment in a sector that has literally run aground in recent years. This was reported today by the South China Morning Post. China has activated unprecedented measures, among them a 300 billion yuan credit line (38.5 billion euros) intended for state companies to purchase unsold houses in order to support businesses in the face of the chronic decline in demand and confidence in the real estate market.
Ma Yunman, a sales agent at 5i5j Real Estate Brokerage based in Beijing’s suburban Fangshan district, told SCMP that about 100 people visited their regional showrooms to see projects and consider purchases last weekend. This marks a 20% increase over usual Saturday and Sunday traffic.
“The overall volume of applications has increased significantly since the new support measures were announced last Friday,” Ma said. “This is aided by the fact that new and used home prices in our area have fallen by 20-30% compared to last year.”
China has activated unprecedented measures since Friday, including a 300 billion yuan (38.5 billion euro) credit line intended for state companies to purchase unsold houses in order to support businesses in the face of the chronic decline in demand and confidence in the real estate market.
Beijing has also asked local governments to buy completed projects and convert them into social housing, and has offered to lower mortgage rates and prepayment ratios to revitalize demand.
More than 1,000 units were transacted over the May 18 weekend in Beijing, according to data compiled by Centaline Property. SCMP estimates that this could be the start of a long-term recovery. But there are also expectations for further, even more decisive measures, so buyers remain cautious. And in any case, as happens in Shanghai, they only move if they see significant discounts on the purchase price.
In the week to May 19, the financial and shopping center recorded an average of 138,000 square meters of sales, or 30% above this year’s weekly average. Total acreage sold also increased 77% from the previous week, according to CRIC.
Home prices nationwide are estimated to fall another 5-6% this year, with prices in higher-end cities likely to stabilize first, given stronger demand and greater confidence, he said Esther Liu, director of S&P Global Ratings, during a webinar Monday.
