Pent-up demand is pulling China’s housing market out of the doldrums, but industry experts are still not sure a strong, sustained recovery is about to take hold.
Urban property prices rose in March for the first time in seven months, adding to evidence of recovery witnessed in rebounding sales since the start of the year.
With real estate accounting for nearly a quarter of Chinese fixed investment, the authorities are doing their bit to help.
This, even though a RMB 4 trillion yuan ($585 billion) stimulus package is kicking in and the cabinet had reduced the proportion of equity capital that investors must put into new projects. Although developers now must meet a minimum capital requirement of 35% for property investment projects.
Reuters reports the various measures have driven cash buyers, particularly newly wed couples, back into the market.
Developers show little inclination to sacrifice price for volume because their financing prospects are much brighter than they were six months ago.
The corporate debt market is taking off, and Beijing has said it will soon launch a pilot scheme for Real Estate Investment Trusts, or REITs, and, crucially, loans are easier to get. For example, SOHO China agreed a RMB10 billion yuan credit line with Bank of China in March for five years so that the developer can expand through acquisitions.
The upshot is that the market could be in for a period of stability.
“Prices will move up and down in a limited range. It’s very unlikely that we’ll see another fall as steep as the one we’ve just experienced,” said Wang Chen, head of research at DTZ in Beijing.