Home sales rise in China after new policies introduced

The Chinese real estate market has witnessed positive changes after the central government underlined efforts to stabilize the property sector and launched promotional campaigns to boost home purchases.

The Ministry of Housing and Urban-Rural Development has designated October as the commercial housing promotion month, as a further step to revitalize the property market. Many cities have actively responded to the campaign by optimizing home-buying policies and launching various promotional activities.

During the just-concluded National Day holiday from Oct 1 to 7, Chongqing Municipality in southwest China witnessed significant growth in commodity home sales, following the real estate policy adjustments introduced at the end of September.

Chongqing has lowered the minimum down payment ratio for individuals' commercial housing mortgages to no less than 15 percent for both first-home and second-home purchases.

Local resident Wu Lingli took advantage of the favorable policy to buy a 127-square-meter newly built apartment in Yubei District of Chongqing.

"My current home is in Banan District. Replacing it with a home in Yubei District can been determined as a first-time purchase in accordance with the new policy. So I can enjoy lower down payment ratio and reduced interest rate," she said.

A total of 48 new real estate projects held sales exhibitions during the week-long holiday, offering discounts ranging from 1 percent to 7 percent on nearly 6,000 commercial housing units.

These policy adjustments and promotional events have so far achieved notable results. From Oct 1 to 7, the transaction value of new commercial housing units in central urban area of Chongqing has grown by 47.1 percent year on year to 1.604 billion yuan (about 227 million U.S. dollars), with the floor space reaching 159,300 square meters, an increase of 55.7 percent.

"We predict that the total floor space transacted in the real estate market is expected to be flat year on year in October and to stop the downturn in the fourth quarter. The home prices are also expected to stabilize in the fourth quarter. Chongqing has also purchased stock commercial property for government-subsidized housing. So far, more than 6,800 housing units have been purchased, covering a total floor space of 400,000 square meters. The coordination between the stockpiled and new housing units will help accelerate the stabilization of the overall market," said Yang Yanbing, director of the Real Estate Market Division of the Chongqing Housing and Urban-rural Development Commission.

The municipality has also launched a four-day autumn real estate trade fair starting Wednesday, where 267 commercial housing projects are exhibited on site.

Real estate sales centers across Wuhan, capital city of central China's Hubei Province, also held activities to stimulate home purchases.

Ms. Wang purchased a 140-square-meter home at a price of about 4 million yuan (about 565,000 U.S. dollars) in Wuhan's Hongshan District. She said the latest adjustments in the down payment and interest rate encouraged her to buy the new home.

"The mortgage interest rate has dropped to 3.15 percent, which means I can pay 580 yuan (about 82 dollars) less on the housing loan per month," Wang explained.

The authorities in Wuhan will also give deed tax subsidies to home buyers who purchase new commodity homes between Oct 1 and Dec 31, with fully subsidy for first-time purchase and 50 percent subsidy for second-time purchase.

Lower-tier cities across China have also been vigorously launching promotions to attract those who work in bigger cities to return to their hometowns and purchase properties with transportation subsidies and discounts.

In Kangbashi District of Erdos City, north China's Inner Mongolia Autonomous Region, a housing expo brought together two-thirds of local real estate businesses. The activity attracted more than 50,000 visitors, and more than 2,700 people registered as interested.

The event also saw the issuance of technical guidelines for the construction of high-quality residential communities, covering the whole process and cycle of housing from planning, design, building, delivery to property services. It is expected to further enhance the quality of housing in the district.

Home sales rise in China after new policies introduced

The market sentiment has greatly improved, though details of China's recently-unveiled stimulus plans are yet to be disclosed, Hubertus Vaeth, managing director of Frankfurt Main Finance, said in a program of China Global Television Network (CGTN) that was broadcast on Wednesday.

China recently unveiled a broad stimulus plan to tackle challenges facing the country's economy. Following the stimulus package, China's stock market went up and the consumer market thrived over the National Day holiday season on October 1-7.

China's National Development and Reform Commission (NDRC) -- the country's top economic planner -- held a press briefing on the stimulus package on Tuesday, but not disclosing details of the stimulus plans.

Commenting on this development, Vaeth said that while the specifics of the policies are yet to be further refined and implemented, the market has already keenly picked up on positive signals, resulting in a significant improvement in market expectations.

"I think it's not a negative that not all policy details have been hammered out. The direction is right. The market clearly smelled that there is a massive impetus coming, and the fine tuning will leave it to the time, leave it to seeing how they -- the market -- response, how the actions of the participant in the market are. So I think this period where we see more details is a period of fine tuning. It is not changing direction. The direction is set right and and it's been a strong impetus. So I'm not worried about there is not clarity about all measures yet. China has been underweight, tremendously underweight," said Vaeth.

Vaeth also expressed the belief that the Chinese stock market will witness a lasting rebound and that the Chinese economy still holds boundless potential.

"We will have a long relay to come if things go right. What do I mean by that? There is a saying in the markets, that says, the market climbs a wall of fear, and they still figure out there. Because of that, the market climb has a long way to go, and to establish the trust, and filter these measurements down, and to stay that course on the impetus of the measurements. That is what needs to be done. And I read from what I hear coming out of China as that it's been clearly understood and it's meant to happen," said Vaeth.

China sees market sentiment improving, with stimulus plan in right direction: expert