Source: Securities Times.
Authors: Chen Yukang, Wu Jiaming

On the eve of the National Day holiday, Beijing, Shanghai, Guangzhou, and Shenzhen, four first-tier cities, have all introduced a combination of new real estate policies.

Beijing has introduced 8 new real estate policies, including adjusting the requirement for non-local households to purchase commodity residences within the Fifth Ring Road. The requirement is now to pay social insurance or personal income tax for at least 3 years consecutively before the purchase date.

Shanghai has issued the "Shanghai Seven", adjusting the housing purchase restriction policy. For non-Shanghai residents and single individuals purchasing residences outside the Outer Ring Road, the requirement to pay social insurance or personal income tax has been adjusted to at least 1 year consecutively before the purchase date.

Shenzhen has optimized the housing purchase restriction policy by zone, where non-local households and adult singles are limited to purchasing one residence. For purchasing residences in Futian District, Luohu District, Nanshan District, Bao'an District's Xin'an Street, and Xixiang Street, proof of one year of consecutive payment of personal income tax or social insurance within the city prior to purchase is required.

Guangzhou has announced the cancellation of various housing purchase restrictions for resident families in Guangzhou.

As October arrives, several major cities have implemented comprehensive policy measures, and the National Day holiday has always been a crucial sales season for real estate companies. Can the property market in first-tier cities welcome a bullish trend in the so-called 'Silver October'? With this question in mind, Securities Times reporters visited sales offices and agencies in Shenzhen, Guangzhou, and Shanghai.

Shenzhen and Guangzhou: 'Silver October' is expected to turn into 'Golden October'.

"The immediate effects of the policies are quite evident. After the new policies were introduced, our project sold 26 units in just two days, nearly triple the sales from the previous weekend." At a new housing project in the Luohu district of Shenzhen, the sales director shared sales achievements and distributed red envelopes to all sales managers.

October 1st marked the first day of the implementation of optimized real estate policies in Shenzhen: relaxing purchase restrictions, abolishing housing purchase and sale certificate requirements, adjusting the period for value-added tax exemption from 5 years to 2 years, and optimizing personal housing loans... A plethora of favorable policies in the property market continue to lower the barrier for homebuyers in Shenzhen.

During the National Day Golden Week, many sales offices in Shenzhen are operating non-stop, working overtime and giving their all to boost sales. It has become a common practice in various locations in Shenzhen during this holiday period.

Currently, the property market in Shenzhen is divided into 'core areas' and 'non-core areas.' For the new housing market, the impact is more pronounced in the 'non-core areas' due to the lower buying thresholds and prices.

At a new housing project near Shenzhen North Station, the journalists saw homebuyers making deals and participating in 'egg smashing' lucky draws. They mentioned that they have been house-hunting for over half a year and recent stock market gains, coupled with further relaxation of real estate policies, finally prompted them to make a decision.

On-site sales staff mentioned that the number of property viewings and transactions in the days leading up to the National Day holiday was several times higher than during the Mid-Autumn Festival holiday. The Shenzhen property market in October is very likely to see a 'Golden October,' and they consider the National Day holiday as a 'Labor Day' as well. The journalists also noticed that a sales control table in a marketing center indicated that most units had been marked as sold.

The marketing managers of two local real estate companies in Shenzhen told reporters that they will strengthen promotional efforts during the National Day holiday, but prices will not change temporarily and they are actively preparing to launch new properties. Data from the Leju Research Center shows that as of September 28th, there are 5 first-hand commodity residence projects in Shenzhen that have been issued pre-sale permits in September, most of which are additional supply of properties.

Regarding second-hand properties, the response in the core areas seems to be more significant than in the non-core areas. When reporters visited Luohu and Futian districts in Shenzhen, many real estate agency managers mentioned that their clients have recently been proactively contacting them, inquiring whether the previously viewed second-hand properties will be 'priced up.'

In addition, high-quality school district residences are also a focus of attention for some home buyers. 'Many clients sell their current properties to upgrade, so second-hand properties with mature living facilities and high-quality school placements are highly sought after. In addition, some second-hand property owners are reducing their prices, but these are all individual preferences, and widespread price reductions have not yet occurred,' stated a senior property manager in Luohu Cui Zhu district.

Data shows that in September, Shenzhen signed 1,686 sets of first-hand residential properties, a 33.5% month-on-month decline; 3,191 sets of second-hand residential properties were transferred, a 16.1% decrease from the previous month, marking the lowest number of second-hand transactions in nearly 7 months. By the end of the month, there is a noticeable warming trend in the market.

Monitoring data from the Leju Research Center shows that on September 30th, the volume of second-hand residential properties traded at Leju's store in Shenzhen increased by nearly 40% compared to the previous month, reaching the highest daily trading volume since February 2021; the trading volume of new residential properties also rose by 24%, reaching a high point in nearly 2 years.

According to data monitored by the Beike Research Institute in Shenzhen, in the fourth week of September (September 23rd to September 29th), the number of signed contracts for second-hand properties in Shenzhen increased by 49.7% month-on-month, with new supply and demand, as well as property viewings, also increasing. Zou Shaowei, a senior researcher at the Midland Research Center in Shenzhen, believes that with frequent policy changes at the end of September, Shenzhen has relaxed restrictions on purchases, sales, and value-added taxes to a large extent, significantly boosting market confidence. It is believed that both first-hand and second-hand transactions will see a substantial increase in October, with second-hand property transactions reaching over 4,000 units without suspense, and even having the potential to exceed 5,000 units.

In Guangzhou, the complete relaxation of purchase restrictions has not only attracted local buyers from Guangzhou but also customers from surrounding cities and even from Hong Kong and Macau. Reporters interviewed multiple new property projects in Liwan, Tianhe, and Nansha districts, where sales managers revealed that customers from Shenzhen and Hong Kong have been driving over and placing orders on the spot.

Huang Tao, the general manager of Zhongyuan Real Estate, stated that based on feedback from frontline markets, in the days following the introduction of the new policies, there has been a significant increase in enthusiasm for property viewings. With the combination of favorable policies such as no purchase restrictions, lower interest rates, and down payments, the "Silver October" in Guangzhou this year, as well as the transaction volume in the fourth quarter, will definitely show a more pronounced rebound.

Shanghai: Homeowners expect potential demand to be activated, and property viewers tend to be rational.

The first day of the National Day holiday marks the first day of the implementation of the "Shanghai Seven Regulations". On that day, Shanghai experienced continuous drizzle. Journalists visited multiple outer-ring property sales offices and found that due to factors such as the weather, the number of property viewers was moderate, and there was no surge in foot traffic. Several sales office staff members mentioned that the "Shanghai Seven Regulations" will release a certain amount of pent-up demand, which will help boost property trade volume. Property viewers generally approach the situation rationally, stating that they intend to make decisions after careful consideration.

At a sales office of an under-construction property in the outer ring of Pudong, Shanghai, the journalist observed that the flow of property viewers was relatively sparse, with small groups entering and exiting showrooms for tours. Although there were many on-site sales staff, they were not busy, with some of them welcoming guests at the entrance.

"Today's foot traffic is fine. The main reason for the lack of busyness is the bad weather," said a sales manager to the journalist. The property is a scheduled development with an estimated handover in two years. The main unit types are over 90 square meters, with a selling price of around 0.06 million yuan per square meter. It is positioned as a mid-end residential area, primarily attracting replacement groups and some pent-up demand customers.

According to him, the second phase of this property will open in mid-October, and the market has responded quite positively to the new property policies. Following the "Shanghai Seven Regulations", there were a total of 7 groups with confirmed reservations the next day on September 30th; an additional 3 groups were added on the morning of October 1st.

Checking the Shanghai Real Estate Trading Center website, the property had its first phase opening in September, with the current house turnover rate being about 10%.

Ms. Liu, a property viewer who is currently engaged in replacement, told the journalist that her "old and shabby" property on the outer ring has been listed with an agency for over three months with very few viewers. She hopes that the "Shanghai Seven Regulations" can accelerate the pace of property replacement.

"Young people need to buy houses, and there is definitely pent-up demand. But the agency also mentioned that people who are buying houses with leverage are becoming more cautious," said Ms. Liu. She hopes that the "Shanghai Seven Regulations" will prompt the pent-up demand crowd to act, thereby accelerating the influx of replacement customers.

The reporter also visited another under-construction property, where the sales office and model rooms had a sparse crowd, with a moderate level of on-site inquiries. It was introduced that the proximity to the industrial park and relatively lower total price are important selling points of the property, thus mainly attracting first-time home buyers.

The sales manager of the property told the reporter that the day before and the day of the National Day holiday received a significant increase in inquiries and viewing appointment calls compared to usual. Overall, the property sales situation has been good since it first opened last year. With the release of new property policies in Shanghai, a small peak during the National Day holiday is expected.

Checking on the Shanghai Real Estate Trading Center website, the property is priced at around 0.05 million yuan per square meter, with prior opening sales conducted half a year and a year ago. Currently, the housing turnover rate is close to 70%.

From the data perspective, the "Golden September" property market in Shanghai is not ideal. Third-party statistics show that in September, a total of 10,717 new homes were recorded for sale in Shanghai, a decrease of 21.91% from the 13,724 units recorded in August; a total of 15,942 second-hand homes were recorded for sale, a decrease of 10.86% from the 17,884 units recorded in August.

It is worth noting that in the final days of September, both new and second-hand property transactions in Shanghai experienced varying degrees of rebound. Data shows that on September 28th, there were 872 transactions of second-hand homes in Shanghai, marking a new high in transaction volume in nearly 77 days; on September 29th, there were 823 transactions of new homes, setting a new high for daily transaction volume within the month.

Chen Julan, senior analyst at the China Index Research Institute in Shanghai, told Securities Times reporters that the introduction of the "Seven Policies of Shanghai" will help restore market confidence, release the demand of some non-local and suburban first-time home buyers, facilitate the turnover of improved housing, and reduce home purchasing costs. Expectations are for a return in heat in the Shanghai residential market, with potential improvement in homebuyer sentiment.

Multiple regions support sales promotion, and a stabilizing trend can be expected.

Unlike previous National Day Golden Weeks, this year there is also local government support.

For example, various districts in Shenzhen have launched activities such as "Good House Carnival", focusing on promoting new housing projects within the area; on October 1st, the Housing Security and Property Bureau of Nanjing officially announced on the platform, listing various welfare information for 152 new commodity housing projects' sales offices in the entire city over the next seven days, implementing housing consumption services during the holidays; Wuhan Housing and Urban Renewal Bureau also issued a statement on October 1st-2nd, stating that on October 1st-2nd, Hankou Jiangtan Sanyang Square will host the "Wuhan Autumn Housing Purchasing Festival", with over 40 property companies participating on-site. The event offers strong policy support and multiple discounts.

Zheng Shunlun, President of the South China Region of Central Plains Real Estate and General Manager of Central Plains Shenzhen, stated that in the short term, the supply of second-hand homes will increase, and developers will also take the opportunity to push more. Next, there will be a large number of new and second-hand housing releases, and the market will be very lively. At the same time, a large amount of demand will also be released. Among the policies introduced this time, adjustments to purchase restrictions, lower down payments, and declining interest rates will effectively boost demand. However, house prices will remain stable without significant rises or drops. "I often say that house prices follow transaction volume. If transaction volume continues to increase and the trend is already clear, when it rises to a certain level, house prices will naturally increase."

Li Yu Jia, Chief Researcher of the Housing Policy Research Center of the Guangdong Provincial Urban and Rural Planning Institute, stated that the People's Bank of China's announcement on improving the pricing mechanism for commercial personal housing loans will generate a significant cost-reducing effect in terms of taxes and overall interest rates. Looking at the characteristics of the real estate market, the period of "Golden September and Silver October" is an important time to start buying houses. If the first-tier cities stabilize, the property markets in the three major metropolitan areas centered around them will stabilize, and nearly half of the national transaction market will also stabilize. This is the path to stopping the decline, stabilizing, and returning to stability. In addition, considering the recent phenomenon of high premium land parcels in Shenzhen and Guangzhou's land markets, and the appearance of multiple property companies competing for land, as well as the new measures of "land acquisition immediately starting construction, delivery upon certificate issuance", it will boost developers' confidence from the source and extend to downstream sales, creating a comprehensive effect of lowering thresholds, reducing costs, and raising expectations, encouraging both essential needs and improvement cycles.

Editor/Jeffy