Beijing's Stimulus Package Fuels Year-on-Year Growth in the Troubled Housing Market

Beijing's Stimulus Package Sparks Growth

In a surprising turn, Beijing's stimulus package has led to year-on-year growth in the troubled housing market of China. Residential sales by the nation’s top 100 developers rose 7.1% in October compared to a year earlier, reaching 435.5 billion yuan (US$61.1 billion). This growth marks the first sales increase for developers in 2023, driven by supportive policies aimed at stabilizing the property sector.

Indicators of Recovery

According to the China Real Estate Information Corporation, sales surged by 73% from September. This data reflects a significant trend of stabilisation as developers, like E-House China Real Estate Research Institute, observe shifts in buyer behavior. A decrease in new supply coupled with rising transaction volumes is essential in alleviating excess unsold inventory.

• China’s government has implemented key measures, including lowered mortgage rates and relaxed purchasing restrictions.
• Investors anticipate a fiscal stimulus package from the National People's Congress to bolster the economy further.

Mixed Signals in the Market

While the housing market shows early signs of recovery, challenges remain. A report from China Index Academy reveals average new home prices rose 2.1% while second-hand home prices fell by 7.3%. Additionally, land acquisitions by leading developers dropped 38.7% in the past ten months, indicating continued hesitance to invest amidst financial strains.

The Long Road Ahead

The broader picture shows that total sales from January to October lag behind last year by 32.7%, making up only a quarter of sales recorded in 2020. As such, while October’s surge is attributed to policy support in major urban areas, CRIC warns that growth momentum may ease as seasonal factors dissipate. Stakeholders remain cautious and vigilant about the returning challenges in the residential market.