China's Property Market Sees Mixed Performance Amid New Measures

China has recently introduced new measures to bolster its property market, leading to a surge in transactions in major cities such as Beijing and Shanghai. However, smaller cities are still grappling with sluggish activity, highlighting the persistent challenges faced by the real estate sector nationwide.

The new measures encompass a range of initiatives, including reductions in minimum mortgage rates and downpayments, along with directives for municipalities to repurpose unsold apartments into social housing. While these steps have spurred demand in metropolitan areas, smaller regions continue to struggle due to enduring issues of oversupply.

Experts emphasize the necessity of additional support for smaller city governments to address inventory surpluses and stabilize their local property markets. Data reveals a notable increase in daily transactions for pre-owned homes in Shanghai and Beijing, although the performance of new home transactions varies.

Despite endeavors by smaller cities to entice homebuyers through lowered mortgage rates and downpayment requirements, the impact has been limited. For instance, Jiaozhou's innovative payment scheme aimed at boosting demand did not yield a significant rise in transactions.

In a bid to stimulate buyer interest, authorities in cities like Changsha have experimented with refund policies; however, overall market sentiment remains cautious. Analysts from Goldman Sachs anticipate further relaxation of measures in the future but foresee a gradual recovery for the property sector, particularly in lower-tier cities and for private developers.

China's real estate market is experiencing a divergence in performance following the implementation of new support measures. While major cities have witnessed heightened activity, smaller urban areas continue to face challenges. As the sector navigates through these dynamics, it is crucial for policymakers to tailor interventions to address the specific needs of different regions, ensuring a more balanced and sustainable growth trajectory for the property market.