SHENZHEN, CHINA – MARCH 09: View of high-rise commercial and residential buildings on March 9, 2016 in Shenzhen, China. The overall Chinese economy is slowing down, and real estate prices and stock market bubbles are at risk. (Photo by Chung Sik/Getty Images)
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Share prices of most Hong Kong-listed Chinese property stocks have soared to their highest levels in more than a year as China's economic stimulus policies continue.
The real estate sector saw the largest gains Hang Seng IndexLongfor Group was the top gainer, with an increase of more than 25%.
Shares of other real estate developers also rose sharply. Shimao Group surged more than 87%, and Kaisa Group surged 40.48%, both hitting their highest stock prices in more than a year.
Similarly, China Overseas Land & Investment's share price rose 12.31%, hitting its highest point since September last year. Vanke's share price rose 39.6%, hitting its highest level since August 2023.
Hang Lung Properties and China Resources Land rose 10.01% and 10.82% respectively.
The Hang Seng Index rose 6%, while the Hang Seng Mainland Property Index soared more than 14%. Markets in mainland China were closed for the Golden Week holiday.
Continued drag on the real estate sector will lead to a sharp fall in demand, leading to below-target growth.
After the central bank launched a series of stimulus policy measures last Tuesday, major cities in mainland China launched easing measures over the weekend to enhance the confidence of home buyers.
Guangzhou Municipal Government It was announced that all home buying restrictions will be lifted starting from Monday. Shanghai's rules shortening tax payment deadlines also took effect on Tuesday. Shenzhen has also relaxed restrictions on home purchases, allowing buyers to buy an additional apartment in some areas.
“Investors are betting that recent policy easing will lead to a recovery in the domestic market, which should help developer sales and prices,” Natixis senior economist Gary Ng told CNBC. Still, he sees challenges in turning those expectations into reality. , especially the inventory pressure in non-first-tier cities.
“If home sales don't improve in the coming weeks, it could be back to square one,” he said.
Morgan Stanley wrote in a report released on Wednesday that while these measures will help stabilize the housing market, raising prices and restoring demand will be a difficult task.
“The continued drag on the property sector will result in a sharp fall in demand, resulting in below-target growth,” the investment bank's Asia-Pacific economists wrote.
The real estate industry once accounted for more than 25% of China's GDP but has faced a long-term decline since 2020 as Beijing cracks down on excessive debt in the industry.
Chinese officials have stepped up support to ease financial pressure on households and stabilize the struggling property market. However, these previous moves have not resulted in significant shifts.
“There are increasing signs of stability, but this does not change the fact that China's real estate industry has entered the twilight of its rapid growth era,” Wu said.