Housing market rises in certain parts of China, but insiders worry about potential capital distraction amid stock frenzy
Published: Jul 08, 2020 03:58 PM

Residents select houses at a sales center of a real estate company in Huaian, East China's Jiangsu Province on Sunday. As China's domestic coronavirus control has made progress, local real estate companies have opened while observing strict measures against the virus. Photo: cnsphotos

As the coronavirus has waned in China, the country's housing market has warmed. Surges in housing transactions in certain parts of China have pushed local governments to roll out tightening policies and issue warnings against panic buying.

However, experts and industry insiders diverge in their outlooks for the property market in the coming months, with some suggesting the rebound will continue in the second half of the year and some worrying about capital distraction as a result of the heated stock market.  

According to latest data from the Shenzhen Real Estate Intermediary Association (SREIA), 3,893 previously owned homes were sold online in Shenzhen last week, up 40.7 percent on a monthly basis. Transfers of property rights for 827 new and 2,310 previously owned homes were completed last week, up 37 percent and 7 percent respectively on a monthly basis. 

The city's property market has heated as a result of the "intentional spread" of rumors that Shenzhen is set to roll out new policies to tighten management of the housing market.

The rumors pushed some buyers to purchase homes ahead of their original plans, according to a statement from SREIA, which urged consumers to look at the real estate market objectively and ignore rumors. 

Housing markets in some other cities like Shanghai also heated recently as the coronavirus outbreak waned and economic activities returned to normal. The owner of a real estate agency in Shanghai surnamed Ma told the Global Times that the transaction volume of small-sized homes had surged 15-20 percent from March to June in the city. 

In the face of rising market demand, Chinese cities have rolled out policies to tighten management of their housing markets. The government of Ningbo, East China's Zhejiang Province has recently rolled out 10 new real estate policies, which include expanding the scope of property purchase restrictions and tightening housing loan audits. 

Dongguan in South China's Guangdong Province recently rolled out a notice that tightened the management of commercial property sales. 

Yan Yuejin, research director at the Shanghai-based E-house China R&D Institute, said that the launch of these policies reflects an overheating property market in certain parts of China this year. The policies also sent out a signal that the government won't tolerate housing speculation. 

Ma expressed worries that the housing market might cool again in the second half of the year if the coronavirus resurges, or if theheated stock market diverts capital. "It's unlikely that both the housing and stock markets will heat at the same time. If the stock market rises, the housing market will edge down accordingly," he said. 

Mainland stocks have surged in recent days as investors flooded capital into the market on hopes of a bull run. The Shanghai market had risen 1.74 percent and the Shenzhen market 1.84 percent on Wednesday, with trading volume reaching 1.54 trillion yuan ($219 billion) on the two markets. 

Yan nevertheless said it's unlikely investors will sell homes to channel capital into the stock markets."The surge in housing transactions in certain cities shows property purchase demand is ample, and the property market has largely walked out of its ebb. The trend will likely continue in the second half of this year," he told the Global Times. 

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