China’s property developers enjoyed a rare day of good news on Friday with their share prices lifted by promises of more state support for the ailing sector.
It came after the country’s central bank said that for cities where the selling prices of new homes fall month-on-month and year-on-year for three consecutive months, the floor on mortgage rates can be lowered or abolished for first-time home buyers in phases.
The property sector, which accounts for a quarter of China’s economy, was badly hit last year with many developers unable to finish building projects leading to mortgage boycotts by some buyers.
Lockdowns and travel curbs to control the spread of Covid-19 also hurt buyer sentiment.
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Hong Kong’s Hang Seng Mainland Properties Index firmed 2.3% in mid-afternoon trade, after jumping close to 4% shortly after the market open.
As of 0709 GMT, Logan Group gained more than 10%, while top leader Country Garden rose 6.6%. That compared with a flat broader market.
“Positive news of state help have mostly been priced-in in the short term after many share prices more than doubled in the past month,” said CGS-CIMB analyst Will Chu. “For the sector to re-rate, the market will need to see a meaningful contract sales improvement in March.”
China’s deeply troubled property sector is set to see home sales fall for the second straight year in 2023, but the pace of declines will ease helped by policy support measures and the lifting of the government’s strict anti-Covid policies.
Property sales are expected to slip by a median of 8% this year, a Reuters survey of eight economists and analysts showed, compared with a slump of around 25% in 2022, as economic activity, household income and consumer confidence are seen rebounding in the second half.
The housing authorities also vowed on Thursday to give strong support to first-time home buyers by allowing smaller down payments and cutting mortgage interest rates.
Ni Hong, head of China’s housing regulator, told state broadcaster CCTV that “reasonable” support needs to be given to buyers of second homes although not for the purchase of three homes or more.
- Reuters with additional editing by Sean O’Meara
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