Some Chinese property developers are betting the country’s home-price slump will soon end following the announcement of long-awaited stimulus measures.
State-owned Poly Developments and Holdings Group, China’s biggest builder by sales, is offering homebuyers full refunds at a project in eastern Wenzhou city if prices drop further below their purchasing costs before the homes are delivered, an official local newspaper reported Thursday.
The tactic, once used by China Evergrande Group in its heyday, is part of Poly’s sales push campaign. Some of Poly’s upmarket residential projects in Guangdong and Sichuan provinces did the same, the report said.
In western Chengdu, a local developer said it will raise prices at all of its projects by 2% starting Oct 1, when the latter half of a holiday busy season begins, according to a local media report Thursday.
The move may help to sway undecided buyers to purchase the properties before prices rise, while also giving them confidence that values will be maintained, the report said. The developer has already offered multiple perks.
“Other real estate firms might follow suit to offer so-called ‘price protection’ to entice buyers,” said Liu Shui, an analyst at China Index Holdings.
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The moves came after China on Tuesday unveiled its biggest package yet to shore up its beleaguered property market, lowering borrowing costs on as much as US$5.3 trillion ($6.80 trillion) in mortgages and easing down-payment requirements for second-home purchases to a historical low.
Later in the week, top leaders pledged action to make the real estate market “stop declining,” their strongest vow yet to stabilise the sector after new-home prices fell in August at the fastest pace since 2014.
Local governments are likely to roll out major property measures in the fourth quarter to stabilise the market, the Securities Times reported Friday.
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“Homebuyer sentiment is recovering a bit,” said Yan Yuejin, vice president of Shanghai E-house’s research, citing his channel checks with homebuyers and developers.
“In China, changes in the mood in the housing market usually lags behind the stock market reaction.”
China stocks erased losses for the year, following a blitz of stimulus measures introduced this week.
On Friday, Shanghai’s stock exchange was even marred by glitches in processing orders and delays amid a frenzy of trading, according to messages from brokerages seen by Bloomberg News.
