Stronger Sales Expected In Golden September And Silver OctoberMainland property market improved further in August after home sales had performed better than expected in the previous month. Average home price decrease (including affordable homes) in 70 major cities reduced to 2.3% Y-o-Y, despite a twelve month period of decline. Prices have been on an upward trend for the last four months, according to statistics. Price growth in tier-1 cities slowed down in August, with Shenzhen’s property price gain ahead of others. Given the lag effect of recent equity market crush on the property market, alongside the fact that US has decided to maintain interest rates at current level, the property market is likely to fuel a recovery.

Benefited from the Government’s policy easing measures, including cuts in reserve required ratio, interest rates, down payment ratio of housing provident fund loans and the removal of home purchase limits on foreigners, many would-be home buyers have already jumped in the market since August. Among the 35 developers under monitoring, a total sale of more than one trillion Renminbi was recorded for the first eight months of this year, representing an increase of 17.7% Y-o-Y, according to industry statistics. However, sales performance was diverse among developers. Six have year-on-year drop in annual sales, whilst 29 other have significant sales rebounds. Just one third of the developers have achieved less than 50% of their annual sale targets as of August.

Given the higher volume of new project launches from the second half of September to October, developers falling behind annual sales targets are likely to ride on the opportunities. Tier-2 cities are likely to benefit the most from policy relaxation which help attract more upgraders. Meanwhile, faster sales pace is likely to be seen due to more new launches.