By love-89.com On October 17th and 18th, two significant press conferences captured market attention, sending a strong signal about stabilizing the real estate market.
On October 17th, the Ministry of Housing and Urban-Rural Development, the Ministry of Finance, the Ministry of Natural Resources, the People’s Bank of China, and the National Financial Supervision Administration convened a joint press conference where leaders from these five central departments unveiled a “combination” of policies aimed at stabilizing the real estate market. They stated the official assessment that “the Chinese real estate market has begun to find its bottom.” The following day, the National Bureau of Statistics released data on the real estate market for the first three quarters of this year, showing a continued narrowing of declines in several key figures.
In fact, since the end of September, the real estate market has shown signs of recovery supported by a series of policies aimed at uplifting the sector, manifesting a general trend of stabilization. According to data from the China Index Academy, from October 1st to 20th, 2024, 2,719 new residential units were sold in Beijing, totaling an area of 310,000 square meters, with month-on-month increases of approximately 56% and 52% respectively.
The market has seen a noticeable increase in transaction volume, continuing the surge from the recent holiday. Following a significant uptick in activity during the National Day holiday, the market has remained vibrant even in the weeks after, despite most days being working days. From both policy and market news, there are continuous favorable signals being communicated.
During the press conference on October 17th, the combined policy measures were summarized as “four cancellations, four reductions, and two increases.” Ni Hong, the Minister of Housing and Urban-Rural Development, emphasized that “under the impact of these policies, after three years of adjustment, the Chinese real estate market has begun to find its bottom.”
Data released on October 18th by the National Bureau of Statistics revealed that in the first nine months of this year, national sales of new commercial housing reached 700 million square meters with total sales revenue of 6.9 trillion yuan, both figures saw a narrowing in decline. Over the same period, investment in real estate development and the newly started construction area have shown continuous month-over-month improvements, narrowing declines over seven consecutive months.
Xu Yuejin, Deputy Director of Research at the China Index Academy, noted that the data indicates a recovery in homebuying sentiment at the national level. In major cities, market sentiment improved significantly following the release of supportive policies at the end of September, with substantial increases in core city market activity during the National Day holiday.
This series of positive policies and official announcements has led to marked changes in the market. Real estate offices are buzzing with activity, transaction numbers are climbing, and the decision-making process for homebuyers is shortening. Recently, many properties for sale in Beijing have felt the warmth of a recovering market.
One project, located in Shougang Park on the west side of Beijing’s Fifth Ring Road and focusing on high-end apartments, reported a significant increase in visitors since October. During the National Day holiday, they sold around 50 units and continued to see weekly averages of about 15 units sold in the two weeks following the holiday. “Especially during the holiday, we had so many clients that the sales advisors couldn’t keep up,” said a project representative.
In another example, Longfor Properties saw a peak in sales at their project in the Zhongguancun Life Science Park right after its launch. On October 1st alone, 10 transactions were completed, and from October 1st to 6th, they welcomed nearly 100 groups of clients daily—an increase of over 50% compared to before the holiday. They recorded over five sales per day during this period, concluding with total sales of 32 units worth 1.9 billion yuan.
Even post-holiday, the high demand continued, with over 1.2 billion yuan in sales within just one week. Weekday visits surpassed 100 groups on average, indicating that clients who had previously been hesitant rushed to make their purchases, with agreements being signed late into the night at the sales center.
The Longfor Shunyi Yuhuajing project has maintained its dominance in sales from January to September 2024, leading in transaction volume, area, and sales amount. Their three-bedroom units have nearly sold out, and offerings of the larger 165-square-meter units have recently seen significant sales activity. They achieved around 200 million in sales during the “Eleven” holiday, and visits in the first half of October increased by 180% compared to September, with sales volume exceeding 260%.
Undoubtedly, these policies have activated market liquidity and released a considerable portion of demand for improved housing options.
Another mixed-use project maintained sales momentum from the National Day holiday. After a remarkable launch bringing in 6.15 billion yuan on October 13th, they introduced two additional buildings on October 19th, attracting over 500 clients that day.
Homebuyers are benefiting significantly from the reduced monthly payments. Starting October 25th, existing housing loan rates are set to undergo substantial adjustments as per the new policies, leading to lower costs of homeownership.
This enhanced accessibility comes as policies have previously lowered the cap on first and second home loan interest rates in many regions, propelling some into what’s referred to as the “3” era for second-home loans. The changes, primarily affecting new housing loans, have also extended to existing mortgages, with the People’s Bank of China announcing collective reductions in outstanding housing loan interest rates on September 29th.
Following adjustments, first-time home loan interest rates in Beijing will now be set to LPR minus 30 basis points, which translates to approximately 3.55% for standard rates based on a five-year LPR of 3.85%. For second-home loans, the adjustments adhere to the local minimum standards.
From October 25th onward, many borrowers can anticipate these reductions being executed without needing to visit bank branches for adjustments, which will be applied automatically by bank systems for the vast majority of floating-rate loan borrowers.
Li, who purchased a property in Beijing with a commercial loan in June 2023 at a rate of 4.75%, will see her rate adjusted to 3.55% after the new directives take effect. “The first adjustment was only a 0.25% reduction, so I didn’t feel much of a difference. This latest change, however, means nearly a 1% drop, significantly lightening my monthly payments by over 400 yuan,” Li commented.
On October 21st, the Loan Prime Rate (LPR) saw its third reduction of the year—the largest yet—dropping by 0.25% to 3.10% for one-year loans and 3.60% for loans over five years.
In terms of overall policy direction, the recent measures are clearly intended to encourage a stabilization of the real estate market. The Central Political Bureau’s meeting on September 26th signaled a strong commitment to halting the drop in the real estate market, followed by a wave of new policies from first-tier cities that have significantly boosted market confidence and improved homebuyer sentiment.
The joint press conference on October 17th highlighted the importance of stable real estate markets in overall economic growth. It emphasized a coordinated approach to policy implementation, clarifying multiple strategies for promoting healthy development in the sector.
Furthermore, the conference touched upon measures aimed at rectifying supply and demand dynamics in the housing market, particularly emphasizing the repurposing of existing housing stock and activating idle land.
As we look ahead to the fourth quarter, the implementation of supporting policies is expected to accelerate. A strong focus will likely remain on executing existing policies, including the removal of certain standards for non-residential properties, optimizing tax implications, and reducing mortgage interest rates.
Overall, the combination of reduced borrowing costs, new policies, and a revitalized market stance may lead to a significant uptick in demand for housing, further supporting the stabilization of the real estate market in the near future.