This article is from the Australian Property Journal archive
MAJOR Chinese developers have seen their stock prices surge following the government’s announcement of efforts to boost the struggling property sector that has been declared a “turning point” by analysts.
Country Garden, the country’s biggest developer, saw its stocks jump by as much as 52% in Hong Kong, as Chinese developers listed in Hong Kong lifted by an average of 11%.
Longfor Properties was up 17% and Hangzhou-based Dexin China by a whopping 151%.
Country Garden followed the rebound with a HK$3.9 billion capital raising ($742 million) that will be used to repay offshore debt.
The Peoples’ Bank of China and the China Banking and Insurance Regulatory Commission unveiled new measures on Friday to give a lift to the property market that include more lending to developers, one-year forbearance of developers’ loan repayments and several adjustments in financial regulations, in a bid to rescue the troubled property sector and broader economy.
Last month, sales by the country’s 100 largest real estate developers contracted 26.5% year-on-year, according to survey by real estate research firm China Index Academy. This year, their sales have fallen by 43%.
The sector’s woes started in August 2020 with Beijing’s introduction of “the three red lines” policy that aimed to deleverage the property industry, which has seen property developer titans such as Evergrande teeter on the brink of collapse. Amid increasing concerns that houses and apartments would not be completed – mortgage payments must start being made before an owned takes possession and construction has started – homebuyers in China embarked on a mortgage boycott this year, estimated at around $430 billion.
The property slump is expected to drag China’s 2022 growth lower by about 1.0 percentage points.
Tao Wang, chief China economist at UBS Investment Bank Research, said the new measures are a “turning point” for the property sector that property would be “much less of a drag” on GDP growth in 2023 as a result.
