Will fresh incentives give China’s housing market more than a short-lived rebound?

Property brokers in China's major cities anticipate busier days as potential homebuyers react to recent policy shifts aimed at revitalizing the real estate market. Some claim they are overwhelmed with inquiries and aim to finalize as many deals as possible, while others hope for more government stimulus to maintain the growing momentum.

Yang Keju, a broker at a Lianjia property agency in Pudong, Shanghai, believes that government support remains crucial for the housing market's performance. However, Yang warns that the current high transaction volume might be short-lived. Beijing recently released a package of incentives, such as extended mortgage terms and the promotion of sales of completed homes.

Longer mortgage repayment cycles can save homebuyers thousands of yuan in monthly payments, and purchasing completed flats helps them avoid risks associated with developer defaults. Although brokers claim that policy changes have triggered a short-term buying spree, analysts argue that these measures are insufficient to initiate a broad market turnaround.

China's real estate sector and related industries still contribute around a quarter of the nation's economic output. You Liangzhou, owner of the Baonuo property agency in Shanghai, emphasizes that policy support can only effectively release pent-up demand. Many clients hoping to upgrade their living conditions are hesitant to act because they anticipate further price drops.

Furthermore, homebuying restrictions in Shanghai continue to deter some buyers from owning multiple units, and further market deregulation is necessary to restore consumer confidence fully. Fitch Ratings reported that the new policies would not significantly boost housing demand or alter the sector's weak sales and investment outlook.

The report suggests that weak new-home sales are likely to continue, and near-term home prices may remain stable at the national level. Shanghai's property market was previously overheated, leading to government-imposed limits on home purchases in 2011 to cool down the market. However, the local government has gradually eased these restrictions since October 2024, now allowing non-resident buyers under specific conditions.

Beijing has also been reducing insurance or income tax payment requirements for non-local families wanting to buy homes within the Fifth Ring Road that encircles the city center.