The Chinese government’s flurry of stimulus measures has upended the country’s stock markets. It has also brought potential home buyers back into the marketplace, raising hopes that official attempts at boosting confidence can rekindle a sector critical to any lasting rebound.
Home viewings and sales of new and previously owned homes jumped in China’s biggest cities during the recently concluded weeklong National Day holiday, state media reported, while rising more modestly in lower-income cities.
Still, conversations with prospective home buyers suggest that uncertainty over Beijing’s policy direction has left many otherwise keen buyers with a sense of hesitancy, a reflection of the scar tissue that has built up after three years of falling prices and developer defaults.
Price controls have also kept home prices from correcting to a level that would bring in potential buyers, economists say, prolonging the sluggishness in the market.
A bold attempt by Chinese policymakers to boost confidence in the economy has sparked some of the most volatile stock-market trading in recent memory—propelling China’s benchmark index to a 25% gain in five days before it tumbled again amid doubts about whether Beijing will follow through with large-scale fiscal stimulus. The announcement of a news conference by China’s Ministry of Finance, set for Saturday, has kept those hopes alive.
In the real world, the impact of stimulus measures has so far been more subdued. Official data showed Chinese citizens boosting airplane and train travel over the National Day holiday that ended Monday, albeit modestly. But per-person consumer spending remained below prepandemic levels, and box-office receipts disappointed expectations.
No corner of the economy has been as closely watched as the property market, which has been under severe pressure since Beijing started a crackdown on real-estate developers’ debt levels in 2021. The heightened regulatory scrutiny led many home builders to default and set home prices on their first sustained decline in many Chinese homeowners’ lifetimes.
Economists have blamed the housing market’s continued woes for weakness in the post-Covid recovery, given real estate’s status as the main nest egg for many Chinese households. As long as property prices remain depressed, they say, Chinese consumers are less likely to spend.
Late last month, authorities reduced the minimum down payment and mortgage rates for home buyers, relaxed home-purchase restrictions in the country’s largest cities and injected liquidity into banks to help them make more loans.
The impact of the new measures could be seen in high-frequency data showing signs of life in the market for new and previously owned homes over the National Day holiday, traditionally a prime home-buying period.
Over the first six days of the holiday, average new-home sales in 25 Chinese cities rose by 23% in floor-area terms from a year earlier, according to data compiled by the China Index Academy, a private research firm focused on real estate.
Hours before the long holiday began, Beijing’s municipal government lowered minimum down-payment requirements and boosted the amount of cheaper government-backed mortgage loans that can be claimed by families with two or more children.
The policies helped spark a surge in house-hunting activity in the nation’s capital. The number of new-home viewings in Beijing during the first three days of the holiday nearly doubled from a year earlier, China’s state-run Xinhua News Agency reported. New-home sales by floor area soared 81% over the course of the week compared with a year earlier, the China Index Academy said.
The frenzy could be seen in the suburbs of southwestern Beijing, where home buyers thronged the showrooms of four new property developments—all of them from state-backed developers.
“We think now might be a good time to buy,” said Wang Feifei, a hospital technician who was touring model units with her husband and 2-year-old son.
Wang, who is six months pregnant with a second child, was especially excited about the new lending rules for families with two or more children that she said would reduce mortgage payments.
“Given the uncertain outlook for our income, we hope to save enough for emergencies after buying the home,” said Wang.
The city’s secondary home market also saw a rebound over the holiday, with some 5,500 previously owned homes changing hands, far higher than the 2,000 sales during last year’s long holiday and the 3,500 transactions in 2022, according to data from Centaline Property Research Institute.
Home sales and property visits also jumped in China’s three other top-tier cities—Shanghai, Shenzhen and Guangzhou—which offered similar measures to stimulate home purchases.
Shenzhen, a booming technology hub abutting Hong Kong in China’s far south, reported a more than sixfold surge in new-home sales during the long holiday when compared with a year earlier, the local housing bureau reported. Sales of previously owned homes also soared.
In nearby Guangzhou, which rolled out the boldest measures among the country’s four biggest cities by scrapping all restrictions on home purchases, new-home sales more than doubled from a year earlier, Xinhua said.
Outside China’s top-tier cities, new-home sales have also been surging by 40% or more in places such as Hubei province, in central China, and Chongqing, in the country’s southwest, Xinhua has reported.
Despite the solid numbers, many households still lack the confidence to fully loosen the purse strings.
While Chinese travelers took 10% more trips during this year’s National Day holiday compared with the same period in 2019, tourism revenue per person remains just below prepandemic levels, Goldman Sachs analysts estimate, based on official data.
“Low tourism spending per head and subdued services prices highlighted still weak domestic demand and continued consumption downgrading,” the investment bank wrote in a Tuesday note to clients.
Caution could also be seen among prospective home buyers with whom The Wall Street Journal spoke at property showrooms in Beijing. Despite the widespread gloom in the housing market, prices for new and existing homes fell by just 5.7% and 8.6% respectively in August from a year earlier.
“The minimum down payment and interest rates are indeed lower than before, but home prices are still too high,” said a house hunter surnamed Zhang, who visited a property showroom with her husband in southwestern Beijing during the long holiday.
Zhang, who works in Beijing’s Daxing district, was weighing an apartment unit by state-owned China Resources Land priced at around 50,000 yuan a square meter, equivalent to roughly $650 a square foot—more than 10 times the going rate in her hometown in the central Chinese province of Henan.
“We’re not rushing into buying right now. After all, it would drain the savings of both our families,” Zhang said. “I hope the government can eventually guide home prices down further.”
Grace Zhu contributed to this article.
Write to Jonathan Cheng at Jonathan.Cheng@wsj.com
