The National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC) both started their annual sessions in March. The two sessions attracted the market’s attention as they shed light on future policy direction.
In Premier Li Keqiang’ s Government work report, positive assurances seemed to be given to the real estate market. The report expressed support to “housing demand from end-users and upgraders”, and did not mention any new regulatory measures regarding speculative demand. Such content was interpreted by market players as a positive signal.
Prior to the soft-tone featured on NPC, the Central Bank had also announced a second round of interest rate cut effective from 1st March, of which benchmark interest rates lowered by 25 basis points to 5.35 percent. Moreover, the Central Bank cut its reserve ratio requirement by 0.5% to 19.5% in February.
Market reaction was immediate. For Beijing residential market, the transaction volume reached 114,800 sqm, up 7.4% compared to the previous week. The average price went up 24% to RMB 25,117 psm. Meanwhile, the Beijing Government lowered the standard of provident fund loan application. Applicants with continuous housing provident fund deposit of 6 months are eligible to apply, while 12 months of deposit were required before the adjustment.
For Shanghai’s residential market, the transaction volume for the first week of March reached 119,300 sqm and the average price remained at RMB 27,383 psm. Most of the new projects will be launched in late-March, stimulated by the recovering market sentiment and developers may raise the home prices for new projects. Primary residential market is expected to see an upward trend for both transaction volume and price.
Shenzhen residential market has also seen a drastic increase in transaction volume and price. The absorption reached 105,113 sqm for the first week in March, up 217% compared to the previous week. The average price remained high at RMB 27,436 psm. The average price of the residential market in both Bao’an and Longgang districts had surpassed RMB 26,000 psm in March, which was an all-time high.
The government has rolled out several stimulus measures in less than half a year. Looking forward, the market is anticipating further rounds of monetary easing policies to be issued after the two sessions. Market sentiment is expected to improve amid the overall easing cycle.