Property sales in China picked up last week as policymakers signalled a relaxation of mortgage controls for first-time home buyers.
Property sales by area in China’s key cities declined by 36.9% in September compared with a year earlier, and dropped by 13% compared with August, according to China Index Academy.
But research by China Securities showed new home sales in the 27 key Chinese cities it tracks rose by 14.2% in the week of October 16-22, compared with the previous week, despite a 32.8% year-on-year decline.
Total home sales in the four top-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen increased by 22.4% on the previous week, the brokerage firm said.
Chinese authorities implemented sweeping measures last year to rein in vast amounts of debt in the real estate sector after wild speculation sent property values soaring and spurred a building spree.
Beijing imposed new deleveraging rules and borrowing limits on companies, limited the amount of land released for development and imposed mortgage quotas on banks.
Evergrande Group, which epitomises the borrow-to-build business model, is now suffocating under $305 billion of debt and has stopped repaying some investors and suppliers and halted building work at many projects across the country.
Evergrande’s difficulties have exacerbated a financial squeeze for developers in China‘s $5 trillion Chinese property sector.
A signal of regulatory easing, though, came last week when an official from China’s banking and insurance watchdog said it was working to “guarantee the credit needs of consumers with rigid demand.”
Liu Zhongrui, head of the Statistical Information and Risk Monitoring Department of the China Banking and Insurance Regulatory Commission, said the commission has taken efforts to “provide support to first-time home buyers in the aspects of downpayment percentage and mortgage rates.”
He added that 90% of Chinese banks’ mortgage loans are issued to first-time home buyers.
A survey by China International Capital Corporation in central China’s Henan province found that the mortgage quota has been eased in some cities, and funds are being released faster over the last few weeks, the investment bank said in a report on Monday.
Meanwhile, the policymakers have encouraged developers to repay their international debts.
On Tuesday, the National Development and Reform Commission (NDRC), which oversees offshore corporate bond issuance, and the State Administration of Foreign Exchange (SAFE) called companies “in certain major industries” to a meeting in Beijing to discuss their offshore bonds, according to an official statement released later that day.
A Cailian Press report said eight Chinese property developers, including Vanke, Shimao Group and Central China, attended the meeting, and most of them asked for support from the government to ease their financial difficulties.
- By Iris Hong