China home sales post modest recovery after latest stimulus

[BEIJING] China’s latest round of stimulus for the housing sector had only a modest impact on sales in the traditionally busy holiday season, raising concerns about how much the measures will boost the sagging market.

New-home sales rose 15 per cent from a year earlier during this week’s National Day celebrations, according to data tracking 25 major cities by research firm Proptech Innovations. The sales by area were down 9 per cent from the same holiday season in 2024, when a stronger package led to a burst of activity.

The existing home sales market showed a similar trend. Daily sales were 21 per cent below the same holiday in 2024, according to China Index Holdings. 

“The buyer interest is certainly back, but it hasn’t translated into robust sales yet,” Proptech analysts said in a report on Thursday (Oct 8).

“A couple of factors, including the relatively limited scope of the latest policy, restrict how much the sales can bounce back in the short term.”

The modest recovery follows last month’s national mortgage subsidies, which are aimed at reducing the financial burden on lower-income households, including new urban residents, recent graduates and rank-and-file workers.

To qualify for the loan breaks, homes must be 1,292 square feet or smaller and priced at 1.5 million yuan (US$224,000) or less.

“Such design isn’t exactly a game changer,” Michelle Lam, Greater China economist at Societe Generale, wrote in a Wednesday report.

“We don’t expect it to materially alter the trajectory of the ongoing housing market correction, particularly in lower-tier cities.” 

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China has adopted a targeted approach as it rolls out more aggressive steps to meet its annual economic growth target of 4.5 per cent to 5 per cent.

The limited scope of the housing package reflects policymakers’ desire to stabilise the economy without resorting to a broad fiscal expansion, since the difference between recent growth trends and the official target is rather small. 

Among smaller cities that are set to benefit from the mortgage subsidies, sales were polarised. 

In Huizhou, an affordable city in the Greater Bay Area that is seeking to fuse 11 cities into a megalopolis, new-home sales rose 42 per cent from a year earlier, according to China Index Holdings. But in Putian, a small city full of shoe factories, new-home sales shrank 10 per cent. 

The holiday sales gain is a “structural recovery driven by policy benefits, but not a complete reversal,” said Zhang Dawei, chief analyst at Centaline Property.

Nationwide, primary residential prices may fall for about two more years, with top cities likely recovering sooner in 2027, S&P Global Ratings forecast on Thursday. 

“Oversupply, unfavourable demographics, and developers’ still-high leverage are the main obstacles to market stabilisation,” noted S&P credit analyst Edward Chan. BLOOMBERG