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Wealthy buyers snap up homes in prime locations amid renewed optimism driven by relaxed purchase restrictions and lower mortgage rates
October 04, 2024 | Staff Reporter | China | Brokerage
Sales of luxury homes jumped in the mainland Chinese cities of Shanghai and Shenzhen immediately after the historic stimulus package, with wealthy buyers snapping up some 360 flats totalling worth 20 billion yuan (US$2.85 billion) as buyers bet on a brighter economic outlook.
Lakeville Phase 6, a residential project by Shun On Land in the heart of downtown Shanghai’s Huangpu district, sold all 108 flats launched on Friday, fetching some 12 billion yuan. At Auant, another luxury project in the city’s Xuhui district, buyers snapped up all 178 available flats – priced from 15 million yuan to 33 million yuan – within an hour. Developed by China Overseas Land & Investment (COLI), it was the third round of sales for the project this year, in which all flats sold out on the day of the launch.
In Shenzhen, Arcadia Bay, another luxury project developed by COLI, found buyers for nearly half of the 152 flats in the third phase on Saturday, pulling in more than 2 billion yuan. All the units in the first two phases launched in the past few months were immediately sold out as soon as they were offered.
It is the first residential project in Shenzhen Bay Super Headquarters Base, a developing business and financial centre in the bustling Nanshan district, planned under the city’s ambitious blueprint for connecting and serving the Greater Bay Area. The area is expected to serve as the new headquarters of technology and financial giants, including Oppo, ZTE, JD.com and Citic Group.
The People’s Bank of China on Tuesday asked lenders to cut mortgage rates by half a point and cut the down payment for second-homes to 15 per cent from 25 per cent. In all, some 150 million homeowners could save 150 billion yuan annually, governor Pan Gongsheng said. These and other measures are aimed at spurring consumption and stimulating real estate sales.
The strong sales in luxury homes reflect the overall rising sentiment. Previously, some observers questioned whether the buoyant luxury market could continue to thrive through the rest of the year, pointing out that the rising supply in the second half and the overall economic downturn would pressure the most resilient segment of the property market.
Now, there is a renewed sense of optimism. Late on Sunday, mainland China’s three biggest cities – Shanghai, Shenzhen, and Guangzhou – issued new policies to relax restrictions on home purchases, echoing the calls from central authorities earlier.
Guangzhou has removed all the curbs for local and non-local residents to buy homes, while Shanghai and Shenzhen relaxed restrictions for non-local residents. Both cities are also exempting owners of live-in homes from paying a 5.5 per cent capital-gains tax if they sell their homes after two years, versus a five-year holding rule previously.
“Nowadays, people prefer downtown luxury houses instead of those on the outskirts, eyeing appreciation in prices to protect their assets amid a lack of ideal investment options,” said Yan Yuejin, vice-president for Shanghai-based E-house China Research and Development Institute.
With more stimulus policies likely to come, sentiment will continue to pick up, he added. “Many ultra-rich buyers will pour money into premium homes in core areas and grab new properties once they are launched. Besides, the latest policies make it easier to sell old homes and buy new and better ones.”
