THE shares of Chinese developers jumped on optimism that Beijing will provide policy support for the purchase of unsold homes from distressed builders.
A Bloomberg gauge of Chinese real estate stocks rose as much as 10.7 per cent to the highest level since December 2023. Longfor Group Holdings advanced as much as 15 per cent in Hong Kong, and China Vanke gained 16 per cent.
China is considering a proposal to have local governments across the country buy millions of unsold homes, sources familiar with the matter said on Wednesday (May 15), in what would be one of its most ambitious attempts yet to rescue the beleaguered property market. Officials are still debating details of the plan and its feasibility, the sources said, adding that it could take months to be finalised if policymakers decide to go ahead.
“The possibility to expand the scale could potentially be exciting,” JPMorgan Chase analyst Karl Chan wrote in a note. “We are still sceptical about whether the scale is large enough to trigger a recovery, but directionally this looks like the right move.”
Beijing has been rolling out more measures to support the sector in recent months. Some major cities have scrapped restrictions on home purchases recently. Still, investors have pointed out that a large quantity of unsold homes due to lacklustre demand is a key issue.
New home prices in 70 cities, excluding state-subsidized housing, fell 2.7 per cent in March from a year earlier. The value of new-home sales from the 100 biggest real estate companies slid about 45 per cent from a year earlier to 312.2 billion yuan (S$58 billion), following a 46 per cent decline in March, according to preliminary data from China Real Estate Information.
A NEWSLETTER FOR YOU
Property Insights
Get an exclusive analysis of real estate and property news in Singapore and beyond.
“The move, if implemented, is an important step to rescue the sector as it could address excess inventory and developers’ liquidity issues,” Raymond Cheng, head of China property research at CGS International Securities HK, wrote in a note. Cheng said 1.8 trillion yuan of funding is needed, assuming five million units are bought from developers.
Other developers also saw their shares gained. Sino-Ocean Group Holdings soared 44 per cent, while CIFI Holdings Group rose 24 per cent. BLOOMBERG
