Boost in Home Sales During Golden Week

BEIJING/HONGKONG (Reuters) – China's average daily home sales during the Golden Week holiday increased by 23% in floor area compared to last year, driven by improved market sentiment following government support policies, as reported by the China Index Academy on Tuesday.

The market, in decline since 2021 due to cash-strapped developers defaulting on loans, received a boost from stimulus measures announced just before the National Day holidays.

• Sales in Smaller Cities: Sales surged the most in smaller tier-three cities, rising 69% among the 25 cities surveyed from Oct. 1 to 7.
• Tier-One Cities Growth: Tier-one cities saw an 18% increase.

Despite these increases, the property market continues to face challenges, including:
– Deeply indebted developers
– Large inventories of new and unfinished homes
– Lackluster buyer confidence
– A strained financial system

Considering the extra two days from last year's Mid-Autumn Festival, which coincided with the Golden Week holidays, there was a 27% decline in home sales overall.

Before the holiday began on Oct. 1, the central bank introduced a stimulus package including:
– A cut in the minimum down payment ratio to 15% for all housing categories
– An impending reduction in mortgage rates for existing home loans

At the end of September, Guangzhou became the first top-tier city to lift all home purchase restrictions, while Beijing, Shanghai, and Shenzhen also eased curbs on purchases by non-local buyers.

State-backed developer Vanke reported strong sales in Guangzhou and Foshan, attributing the success to the easing of restrictions. They announced transactions nearing 3 billion yuan ($425.2 million) during the holiday, selling over 200 units in each of three developments.

Longfor, a major privately owned developer, indicated that its daily average sales rose 20% from last year and were 80% higher than the Labour Day holiday week earlier this year.

“The transaction volume of some projects has surpassed the total for September,” stated China Index Academy.

The effects of the latest stimulus are expected to influence short-term sales, with significant growth anticipated for October. However, analysts caution against declaring a solid recovery, suggesting that more stimulus may be necessary.