China Real Estate Shows Signs of Recovery... Transaction Volume Rises After Stimulus Measures

Sharp Increase in New Commercial Housing Transactions in Beijing Compared to Previous Week
Expecting Effects of Regulatory Easing Such as Lower Down Payment Ratios for Buyers

As China implements the relaxation of real estate regulations in major cities, housing transaction volumes are gradually recovering.

According to the China Residential Data Research Center on the 19th, as of the 17th, the daily transaction volume of new commercial housing in Beijing was 364 units, an 89.0% increase compared to the recent weekly average. In terms of transaction volume itself, this is the highest since the October average. In Shanghai, 558 units were recorded on the 16th, marking the highest monthly figure.

Until last month, Beijing experienced a phenomenon where supply surged rapidly while transactions continued to decline. As of November, the supply of new commercial housing was 4,759 units, a 128.8% increase year-on-year, but transactions decreased by 7.4% to 3,443 units.

The state-run media China Securities Journal stated, "Since the implementation of real estate optimization policies in Beijing and Shanghai, purchase demand has been stimulated as a strong positive factor," adding, "In December, the performance of real estate companies has improved, and transaction prices have risen, providing momentum." The outlet also cited a local Beijing real estate agent’s case, saying, "A customer who said they would view real estate over the weekend suddenly signed a contract at 1 a.m.," explaining, "They are rushing due to concerns that prices will rise again."

Earlier on the 14th, Chinese authorities relaxed housing purchase restrictions in the capital Beijing and the economic hub Shanghai. Despite the real estate market downturn, authorities had been hesitant to ease regulations in first-tier cities where demand remained relatively strong. Similar to Gangnam in Seoul, these cities are symbolic in the real estate market, raising concerns about fueling speculative sentiment.

However, recent announcements lowered the down payment ratio for first-time homebuyers in Beijing from 35?40% of the house price to 30%. The down payment ratio for second home purchases was reduced to 50% in six central urban districts and 40% in non-central districts. Additionally, regulations on so-called 'non-luxury housing' (general housing) were relaxed for the first time since 2014, allowing mortgage loans. Shanghai also lowered the down payment ratios for first and second homebuyers to 30% and 40% of the house price, respectively.

In September, China announced that even if a person had previously purchased a home but is currently without one, they would receive the same preferential benefits as first-time homebuyers. For first-time homebuyers, the down payment ratio is lower than for general transactions, and loan interest rates are preferential. The intention is to lower barriers to housing purchase financing and increase transactions.

Jianlong Xue, an analyst at the Residential Data Research Center, explained, "With the continuous role of policies and efforts nationwide, new housing transactions will become more active in the latter half of December," adding, "It could exceed November’s performance." Li Yujia, senior researcher at the Housing Policy Research Center of the Guangdong Urban Planning Institute, said, "First-tier cities are more sensitive to regulations, and the policies introduced by authorities for Beijing and Shanghai are very important 'signals,'" adding, "They can achieve two goals: promoting transactions and revitalizing funds for real estate development companies."

This content was produced with the assistance of AI translation services.