Property shares in China rally thanks to strong policy support
Published: Aug 28, 2023 06:56 PM
real estate market Photo:VCG

real estate market Photo:VCG

Chinese property shares rallied on Monday after authorities announced measures to bolster the housing market, including a further easing of mortgage policy.

On Monday, Jiangsu Zhongnan Construction Group closed up by the daily limit of 10 percent at 1.93 yuan ($0.26), Huayuan Property rose by the daily limit to 2.15 yuan and Southwest China's Chongqing-based Dima Holdings rose by 7.87 percent to close at 1.92 yuan.

The China Southern Real Estate ETF rose by 4.67 percent on Monday.

On Sunday, the China Securities Regulatory Commission announced new policies to back up investor confidence, easing restrictions on listed real estate developers' refinancing.

The fresh move, adding to recent government actions to stabilize real estate market and the economy at large, is meant to make listed developers use the capital market to raise more funds, market observers said. It could signal a turn for the better in the housing market.

"The policy adjustment underscores the importance attached to real estate, which will help ease listed developers' liquidity crunch and prevent property-related risks from spilling over to other sectors," Yan Yuejin, research director at Shanghai-based E-house China R&D Institute, told the Global Times.

Evergrande Group officially resumed stock trading on Monday after a 17-month halt, which helps underline the stable growth of the real estate sector, Yan said, noting that domestic developers' operational and financial situations will continue to improve.

Market expectations have recently improved thanks to official policy supports, Yan said. Under existing rules in some major cities, including Beijing, anyone who had previously owned an apartment couldn't be classified as a first-time buyer and have to pay higher mortgage rates.

On Friday, the Ministry of Housing and Urban-Rural Development announced that it is in favor of the adjustment of mortgage lending policies and measures regarding the definition of first-home buyers.

As the authorities continue to ramp up policy support, along with the traditional housing sales peak season in September and October, housing sales are expected to see a turning point soon, Tian Yun, a Beijing-based expert, told the Global Times.

"Recent policy adjustments will reduce the cost of buying their first homes," he said.

He noted that Chinese cities will continue to optimize housing purchase policies -- for example, lowering down payment requirements and cutting interest rates on existing mortgages to stimulate market demand and promote the healthy and stable development of the real estate sector.

In November 2022, the CSRC removed the fundraising ban on listed developers, saying that they could resume mergers and acquisitions and equities trading. The proceeds could be used to buy properties, replenish working capital and repay debts.

Responding to a question over the liquidity problem faced some developers, National Bureau of Statistics spokesperson Fu Linghui said on August 15 that China's property market is adjusting and some developers like Evergrande have encountered difficulties. However, the problems are deemed temporary with the sector risks under control.

Global Times