China’s secondary housing market showed signs of recovery as sales in major cities jumped to a 14-month high following supportive policy measures. But the primary market remains weak amid buyer caution about indebted developers’ ability to deliver homes.
Transactions of pre-owned homes in 14 tracked Chinese cities rose 11.2 per cent month on month and 27.9 per cent year on year to 119,470 units in June, the highest since May 2023, according to a report on Wednesday from Zhuge Real Estate Data Research Centre.
The positive figures come six weeks after China announced a historic rescue plan for the beleaguered sector, including a 300 billion yuan (US$41.3 billion) relending facility to help local governments buy unsold homes from distressed developers to clear excess inventory.
However, a report from China Index Academy on Monday showed that the volume of new home sales in 100 cities for the first half of the year fell 40 per cent year on year. Transaction volume in June dropped 20 per cent compared with the same period in 2023, although the decline narrowed by 10 percentage points versus May.
Three tier-one cities – Beijing, Shanghai and Shenzhen – saw rebounds in the secondary market in June, according to Zhuge.
In Shanghai, 26,374 lived-in homes changed hands last month, a 48.9 per cent jump from May and a 114.2 per cent increase from a year earlier, the agency said.
Shenzhen’s second-hand sales increased 2 per cent month on month and 74.1 per cent year on year to 4,239 deals.
The agency did not track China’s other tier-one city, Guangzhou, in southern Guangdong province.
All four tier-one cities have relaxed home-purchase restrictions and lowered mortgage rates to pull buyers back into the market.
Listings of pre-owned homes in June increased 3.7 per cent compared with May and 38.7 per cent compared with a year ago to 2.31 million units, according to Zhuge.
Sales of second-hand homes expanded to account for 64.5 per cent of total home transactions in 25 major Chinese cities during the first five months of the year, compared with 55.6 per cent in 2023, the China Index Academy report said.
“Sales in the secondary market are outperforming the primary market, as people tend to purchase existing homes rather than new homes on concerns about delivery of homes by developers suffering liquidity problems,” said Meng Xinzeng, an analyst with China Index Academy.
Aggressive pricing by homeowners hoping to sell their properties quickly also boosted the secondary market. “Homeowners are usually more flexible to adjust asking prices, and they offer bigger discounts to lure buyers,” Meng said.
The year-on-year change in property sales value will gradually improve in the second half of 2024, according to Nomura analysts. They expect to see single-digit declines given the low base last year and the easing measures announced in May, according to a research note on Tuesday.
Still, they warned that a recovery in prices for both primary and secondary homes will be a key to determining whether “a meaningful sector recovery is really taking place”.