(Bloomberg) -- China’s latest steps to revive the housing market have had an immediate impact, judging from reports of brisk sales and buyer interest during the nation’s week-long holiday. Whether the rebound will be sustained is another matter.
Average daily sales by area in 25 cities rose 23% compared with last year’s National Day celebrations, after accounting for seasonal differences, China Index Academy figures showed Tuesday. The numbers probably understate actual transactions because online deals have yet to be tallied, the analysts said.
In cities with residential projects running promotions, visits by prospective homebuyers climbed at least 50% from a year earlier, China Central Television News reported, citing the Ministry of Housing and Urban-Rural Development. About 130 cities across 20 provinces rolled out various perks to entice buyers.
The flurry of activity came days after authorities announced a series of policies to stabilize the real estate sector, including by lowering existing mortgage rates and minimum downpayment requirements for second-home purchases. At the local level, Beijing and Shanghai were among cities that widened eligibility to purchase properties.
“Results in the core cities have surpassed expectations during the holiday, and we expect a significant growth in October sales data,” said the analysts at China Index Academy. “There is also more room for easing in Beijing, Shanghai and Shenzhen, while lower-tier cities may consider increasing the amount of subsidies.”
Beijing city saw expressions of intent to buy new homes double in the first three days of October, state broadcaster CCTV said. In Shenzhen, sales of new homes jumped more than 10 times in the first six days of the month, while used-home transactions more than tripled, Cailian reported, citing Shenzhen Centaline Property figures. Real estate agents in Shanghai rolled out a “no closing hour” policy after visitors increased, while some buyers in Shenzhen even paid deposits for apartments without viewing them in person, according to the Securities Times.
Still, Chinese developer shares pared gains on Tuesday as mainland trading resumed after the holiday. The Shanghai Stock Exchange Property Index had initially climbed as much as 9.8% before closing 2.3% higher after China’s top economic planner refrained from unveiling fresh property measures at a closely watched news briefing.
A Bloomberg Intelligence gauge of Chinese developers, which includes Hong Kong-listed shares, tumbled 24% as the Hang Seng Index fell. The BI measure remains up 63% since the stimulus was announced on Sept. 24.
At the National Development and Reform Commission briefing, where investors were anticipating fiscal stimulus, authorities reiterated longstanding goals. The government will focus on accelerating the absorption of housing inventory, increasing the quality of homes and revitalizing existing land, among other targets, said NDRC Chairman Zheng Shanjie.
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Some experts have warned that more is needed to cement a rebound, including a greater focus on rebalancing the economy toward domestic consumption.
“A solid recovery in the real economy, reflected in improving job and income outlooks, holds the key to a turnaround of confidence in housing,” Bloomberg Intelligence analyst Kristy Hung wrote in a report. Persistent concerns about unfinished homes could lead buyers to prefer secondhand properties over new ones, she said.
While property sales “may have improved” in early October, broader economic data is expected to suggest weak momentum, according to UBS Group AG economists Tao Wang and Ning Zhang. Authorities may announce a fiscal package after the holiday or around Oct. 18, when third-quarter figures are released, they wrote on Monday.
The latest stimulus measures will give a marginal boost to the housing market in the fourth quarter, according to analysts at China Index Academy. Citic Securities Co. sees potential for the market to turn around in major cities.
“It seems like the number of visitors to showrooms and transactions in first-tier cities has risen,” Citic Securities analysts including Chen Cong wrote in a report Monday. “Price declines in these cities have a chance of stopping this year.”
--With assistance from Emma Dong.
(Updates with China Index Academy figures in second paragraph)
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