Sales for China’s largest developers edged up in September after Beijing rolled out a programme to support the struggling property market, as China Vanke, Country Garden Holdings and Shimao Property Holdings reported month-on-month growth.
But analysts said given the uncertainty surrounding the government’s plans for stimulus in the future, are the gains sustainable?
Shanghai-based Shimao reported a 13.1 per cent month-on-month increase in contracted sales, which reached 2.9 billion yuan (US$415.4 million) in September, according to a Monday filing with the Hong Kong stock exchange. Sales rose 45.5 per cent from a year earlier, as sentiment improved after the People’s Bank of China last month cut mortgage rates and down payment requirements, while local governments eased restrictions for homebuyers.
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Meanwhile, China Vanke recorded new home sales worth 10 billion yuan during the weeklong “golden week” holiday. And Country Garden said the number of people who indicated they were interested in a project by paying a deposit surged 34 per cent when compared with another weeklong holiday back in May.
After authorities unleashed their most aggressive support package since the Covid-19 pandemic in September, China’s finance ministry over the weekend did not deliver a broad-based fiscal stimulus package. Instead, it said it would be more forceful in dealing with local government debt and the property market. Specifically, it encouraged local governments to buy unsold homes and stabilise the property market by issuing special bonds.
“If funds from special bonds can be used to purchase existing housing stock, it would effectively address the issue of funding sources for local governments’ property acquisitions, significantly expanding the scale of such purchases,” said Wang Xingping, a senior analyst at Fitch Bohua. “This, in turn, would boost developers’ sales and ease their liquidity pressures.”
“However, in practice, low purchase prices and strict acquisition standards set by local governments have limited some developers’ willingness to sell. The future effectiveness of these policies will depend on balancing the interests of all parties, but overall, they should support an improvement in developers’ sales performance,” she added.
Source: SCMP
