China property shares surge on easier home purchase rules, improved sentiment By Reuters

By Clare Jim

HONG KONG (Reuters) -Shares of China’s property developers soared on Monday, with broad double-digit gains, as investors cheered easier home purchase rules in major cities and Beijing’s latest burst of stimulus to boost confidence in the depressed sector and the economy.

China’s Politburo pledged last week to strive to achieve the 2024 economic growth target of roughly 5% and halt declines in the housing market, two days after the central bank unveiled its biggest stimulus since the pandemic.

Hong Kong’s Mainland Properties Index jumped 6.4%, sending the total gains to 40% since last Tuesday following the central bank’s latest economic support measures. The mainland’s CSI 300 Real Estate index rose 9.7%.

“It’s really a big turnaround, the policies are so intensive, we have never seen such clear instruction to stop housing prices declining and support the stock market,” said Dickie Wong, executive director of research at Kingston Securities.

Guangzhou on Sunday became the first top-tier city to lift all restrictions on home purchase, while Shanghai and Shenzhen said they would ease curbs on housing purchases by non-local buyers and lower the minimum downpayment ratio for first homebuyers to no less than 15%.

Alan Cheng, Centaline Property Agency CEO for southern China, said their clients in Shenzhen have reacted positively on Monday, with the firm recording three times the deals of a typical workday.

Spurred on by the supportive measures, some new launches in major cities led by Shanghai were quickly sold out, while some developers decided to increase the selling price of their projects.

Shui On Land said it has sold out all 108 units in the first batch of a high-end development in Shanghai on Friday at its launch, achieving 12 billion yuan ($1.71 billion) in sales.

Larger rival Longfor Group said its new flats worth 1.5 billion yuan ($213.90 million) in a Shanghai project were sold out within two hours on Friday, and its project in Hangzhou sold 214 flats on the day of the Saturday launch – more than 90% of the total – and raised 1 billion yuan.

The Beijing-based developer also said one of its projects in the capital city recorded much faster sales since last Tuesday after the central banks’ stimulus package, and it plans to raise its selling prices after promotional activity during the week of national holidays starting on Tuesday. The developer didn’t provide further details.

Some small local developers including Henan Zhuokai and Chengdu Jiahe have already raised their selling price by 2% in the past few days, local reports said, after state-owned developer Poly Developments tried to boost buyer confidence with a conditional refund guarantee.

The three developers could not be reached for comment.

JP Morgan said the market will need to see sustainable sales recovery for more than two months to confirm it is really bottoming out.

“We saw similar market reactions in previous easing episodes. Unfortunately, the uptick in market sentiment mostly turned out to be short-lived,” it said in a research report.

CONFIDENCE-LED RALLY

Still, investor optimism drove up property stocks, with Shenzhen-based Kaisa Group and Fantasia closed up by 82.6% and 37.8% on Monday, respectively, while major developer Sunac, headquartered in Beijing, rose 55%.

Vanke shares in Shenzhen, and Shanghai-listed Greenland and Poly all rose by 10%.

China’s central bank separately said on Sunday it would tell banks to lower mortgage rates for existing home loans before Oct. 31.

“We see it as a good and swift start to achieving the central government’s target,” CLSA said of the easing in a research note.

“We expect more liquidity injections from central government to help destock the property market and thus fix the oversupply issues, which takes time,” it added.

The brokerage expected the property market to bottom out in the second half of 2025.

($1 = 7.0125 renminbi)