Global Courant
BEIJING – Chinese developers are banking on the upcoming Golden Week holiday period to trigger a long-awaited rebound in home sales, in the first major test of whether recent policy support is enough to stem the slump.
The eight-day public holiday, which starts on Friday, is the centerpiece of the industry’s busy September to October season.
The stakes are higher than ever this year as the housing slowdown weighs on China’s economic recovery and developers struggling to refinance rely on cash from sales to meet their debts.
“Real estate sales have been very subdued this year, so accelerating transactions in the next two months will be crucial for most developers,” said Mr Zhang Hongwei, founder of Jingjian Consulting, which advises real estate companies. “Otherwise, they will have to take a bigger hit to achieve better sales by the end of the year.”
If sales in October are not good enough, local governments will roll out more stimulus measures, Mr. Zhang added.
An easing of mortgage restrictions at the end of August caused a surge in home sales in larger cities, which are already losing momentum.
That’s fueling speculation that policymakers will have to do more to revive sentiment, which has been plagued by concerns about unfinished apartments, falling property values, high unemployment and falling incomes.
A Bloomberg Intelligence poll of developer stocks fell the most this year on Monday after China Evergrande Group said it must revise its debt restructuring plan, raising the risk of a liquidation of the country’s largest debt builder.
Another former real estate giant, Country Garden Holdings Co, is trying to avoid bankruptcy.
Some builders are already taking aggressive steps to entice homebuyers.
One developer in Guangdong is offering incentives to buyers of its Royal Skyrim apartments in Shenzhen to purchase additional properties elsewhere in the province.
According to agents, they can enjoy down payments as low as 20 percent at the project in the smaller nearby city of Dongguan.
Thirteen developers from Harbin, the capital of China’s northernmost province, went to the eastern city of Nanjing earlier this month to promote their 21 projects, hoping buyers who love to travel would view them as vacation properties.
Local governments also help. A city government in central Anhui province has handed out 5,000 spending vouchers worth as much as US$137 ($187) each to home buyers, according to an official announcement.
To take advantage of the sales period, local governments have followed each other in recent weeks to stimulate demand for housing. Some have relaxed rules banning non-residents from buying property there.
