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China's Real Estate Revival: Emerging from the Slump with a Surge in Sales


Lauren Miller

June 3, 2024 - 08:04 am


China's Property Market Witnesses Uplift as Cities Ease Restrictions

In a notable change of fortune, China's real estate sector has exhibited the first uplifting signs in several months, attributed to the recent relaxation of property restrictions by two of the country's most significant cities. This weekend in Shanghai recorded a surge in homebuyer sentiment with approximately 90% of the units from over 300 new offerings at a development project being rapidly snapped up. This marked a striking increase in sales compared to figures from March for the same project. Concurrently, the city of Shenzhen also witnessed a swell in potential buyer interest, prompting some developers to withdraw their previously offered discounts. This reversal is evident with the rebound of existing-home sales witnessed within both cities.

A Brighter Horizon for China's Real Estate After Prolonged Downturn

China's real estate industry has faced a prolonged slump, lasting three arduous years which is now showing promising signs of easing. This follows an aggressive move by the central government to implement a sturdy rescue package aimed at interrupting the downturn. This strategic relief unfolded at the grassroots level with over 200 cities across the nation relaxing policies revolving around purchase restrictions and downpayment ratios. These figures were detailed by a report from the state-operated Xinhaea News Agency. The momentum of this easing strategy picked up last week when major metropolises including Shanghai, Shenzhen, and Guangzhou took bold steps in line with this welcome trend.

Analysts Weigh In on Positive Market Sentiments

According to Raymond Cheng, who is at the helm of China property research at CGS International Securities HK, these burgeoning signs of improvement in market sentiment can be traced back to the robust policy support unveiled in mid-May. Cheng remains optimistic, projecting that sales will continue an upward trajectory through the current month.

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Unprecedented Buyer Interest in Shanghai and Shenzhen Project Launches

Shanghai's dynamism as a financial nexus was on full display when a throng of eager buyers descended upon a development project undertaken by Xiangyu Real Estate Group Co. The immense crowd which formed on Sunday witnessed hopeful buyers self-touring model apartments due to insufficiency of staff to escort them, disclosed an agent at the site. According to the agent, Zhao – who preferred to be identified only by her surname as she was not sanctioned to engage with the media – the recent influx of customers plowing inquiries indicates a significant surge in interest, one not seen for some extensive period.

At the same time, in Shenzhen, the repercussions of this surge in homebuyer interest resulted in state-owned Poly Developments and Holdings Group Co. retracting a 2% discount previously offered on their Jade Apartments residential project in Longgang district on Saturday. Similarly, the local real estate firm Galaxy Real Estate took back a 2% rebate after achieving its May sales objectives ahead of time.

China’s Developer Stocks Rally Amidst Signs of Crisis Recovery

Enlivened by a sense of optimism that the bleak days of the crisis might be on the wane, shares of China's hard-hit property developers have begun to ascend. The top 100 real estate companies witnessed a dip in new home sales by 33.6% year-over-year in May, a slight relief from April's alarming 45% downward spiral according to data from China Real Estate Information Corp. In a show of market confidence, a Bloomberg index tracking Hong Kong-listed Chinese builders soared as high as 2.3% on Monday. This index has impressively rallied 42% since hitting a nadir in April.

The Resurging Interest in the Used-Home Market

It isn't just the new home market that's seeing revitalization; the used-home market, too, has taken a leap forward, surpassing new home sales. This shift is mainly driven by greater reductions in the prices of existing homes and the certainty of purchasing property that is readily built and available. As an illustration, the second-hand home sales in Shanghai over the last weekend soared 50% compared to the daily average of the month, as reported by the city's official property transaction house.

Shanghai's official property transaction house

The thriving market didn't end in Shanghai as Shenzhen also reported a boost in its existing-home sales figures. With an 8% climb over the previous weekend, sales hit their zenith in over three years. That information hails from Leyoujia, the largest property agency in Shenzhen, which based its data on transactions they facilitated.

To read more about this topic and to understand the nuances of the China Property Stocks Gain, you can access further information from the Bloomberg article "China Property Stocks Gain as Home Sales Drop Eases".


Turning to a brighter chapter, China's beleaguered residential market seems to be breathing a sigh of relief after a disheartening three-year slump. If sustained, the renewed vigor witnessed in the two vibrant cities of Shanghai and Shenzhen may well be a harbinger for nationwide recovery. From state-initiated stimulus packages to the local governments' deregulatory maneuvers, various factors have played their part in steering the real estate sector towards stability. The effect of these measures is palpable with amplifying stock values of developers, an invigorated interest in existing homes, and a welcome revival in the sales numbers for new projects. This transitioning phase in China's real estate narrative not only revitalizes market dynamics but also holds the promise of renewing investor confidence in what once was one of the world's most booming property markets.

Alluding to the refreshed optimism and potential for escalating sales in the property market, this news marks a turning point for a nation's sector that has had far-reaching impacts on its economy. Moreover, the ripple effect of this mini-recovery is far-reaching, potentially aiding in the stabilization of the broader global real estate picture, which, in turn, affects international economic trends.

As China’s real estate market rises from the shadows of a challenging past, the world watches closely to see if this recovery is the start of a stable upward trajectory or merely a temporary upliftment. The comprehensive policies being unrolled and their successful implementation by local cities are indeed sowing seeds for renewed real estate growth, which will be keenly observed by international markets and investors alike.