Shenzhen's latest property easing is its most significant yet, but JPMorgan questions if local measures alone can sustain a broader market recovery.
Back
Shenzhen Eases Homebuying Rules in 3 Districts to Boost Market
The Chinese technology hub of Shenzhen rolled out its most substantial property support package in seven months, easing purchase restrictions in prime districts for non-local buyers and increasing loan limits in a bid to revive housing demand. The new rules, effective April 30, are seen by analysts as a more aggressive step than similar moves in Beijing and Shanghai.
"Many local governments have introduced policies to support the real estate market this year, such as easing purchase restrictions and lowering mortgage interest rates," Shaun Brodie, head of research content at Cushman & Wakefield Greater China, said. "Such policies help lower the threshold for home purchases and stimulate housing demand."
Under the new policy, non-local households with a valid residence permit can now purchase one commercial home in the core districts of Futian and Nanshan. Previously, buyers needed at least a year of social security or tax payments. For eligible resident families, the policy allows for the purchase of one additional housing unit in these areas. Additionally, the maximum family loan amount from the city's housing provident fund was raised to 1.3 million yuan (approx. $180,000).
The move comes as China's property market shows nascent signs of bottoming, with home prices in the four largest cities rising 0.4 percent in March. Investors are now watching whether the stimulus can translate into a sustained recovery during the crucial May Day holiday sales period, a key test for the market's trajectory for the rest of the year.
A More Targeted Easing
JPMorgan noted in a research report that Shenzhen's easing is stronger than that of Beijing and Shanghai. While Shanghai requires three years of tax payments for non-locals to buy up to two units and Beijing requires two years for one unit, Shenzhen's relaxation is comparatively more direct. The bank believes the measures could improve local transaction volumes and property prices for at least one to two months.
The policy arrives against a backdrop of a tentative nationwide rebound. In March, 14 cities reported price increases in the new home market, four more than in February, according to the National Bureau of Statistics. This positive momentum appeared to continue in April, with Beijing and Shanghai both recording higher transaction volumes in the first half of the month compared to March.
Investor Focus Shifts to Developers
While the policy is local, its impact is being weighed on the shares of major developers. JPMorgan's report highlighted a preference for state-owned enterprises with strong execution, favoring CHINA OVERSEAS (00688.HK), whose share price has lagged but has shown strong sales, and CHINA JINMAO (00817.HK), which is expected to maintain its sales momentum.
The bank added that it does not expect broad, nationwide easing policies in the near term, given the recent improvements in market indicators. The focus remains on how these city-specific policies will perform. "Cities with strong fundamentals are gradually bottoming out, becoming bellwethers and helping improve sentiment for more cities to follow suit," said Lu Wenxi, an analyst at Centaline Shanghai.
This article is for informational purposes only and does not constitute investment advice.
[1] JPM: Shenzhen Property Policy Easing; Favors CHINA OVERSEAS (00688.HK) and CHINA JINMAO (00817.HK)[2] China’s Shenzhen Relaxes Home Buying Rules to Boost Demand[3] China's Shenzhen further eases homebuying curbs[4] Realty mkt sees broad rebound[5] US Fed's Biggest Disagreement in 34 Years, Crude Oil Surged, Base Metals Fell Across the Board, LME Aluminum, SHFE Nickel, and Silver Led Declines [Overnight Market]
