Housing Markets Rebound Across Major Chinese Cities as Policies Ease

The housing markets in China’s major cities are showing signs of a strong rebound following the easing of property curbs in recent months. Cities like Shenzhen, Guangzhou, Beijing and Shanghai reported surging transaction volumes and the return of practices like “tea fees” paid to developers, indicating rising demand.

In Shenzhen, new home sales soared and some projects sold out in mere hours, making it the first city to see “sunshine sales” after the “September 29 new policies”. Secondary market transactions also jumped significantly compared to last year. Analysts attribute this to pent-up demand being released as a result of policy relaxation.

Guangzhou, being the first top-tier city to fully exit purchase restrictions, is attracting buyers from Hong Kong, Macau as well as overseas Chinese. One commercial association in Zhejiang organized a group purchase of 10 units worth over 180 million yuan in Guangzhou’s Panyu district during the National Day holiday.

The frenzy is spilling over into the resale markets of Beijing and Shanghai, where single-day transaction volumes hit multi-year highs in the first weekend after the holiday. The reemergence of “tea fees”, or extra sums paid to developers on top of the purchase price, underscores the heated sentiment.

However, many commentators remain skeptical about the durability of this rebound. They argue buyers are being lured by unrealistic expectations of price appreciation and that the uptick mainly represents a short-term response to policy changes rather than a fundamental shift in demand and affordability.

There are also worries that the surge is amplifying risks by encouraging more leveraged bets on real estate. If the exuberance proves unsustainable and prices eventually correct, the most aggressive buyers could face outsized losses.

Another risk is that the rebound remains uneven and overly dependent on top tier cities, while lower tier markets continue to struggle with oversupply and weak fundamentals. The lack of geographical breadth could constrain the positive spillovers to the broader economy.

At the end of the day, a robust and healthy housing market recovery requires an improvement in underlying factors like household incomes, productivity growth and urbanization. Merely relying on policy stimulus and speculative demand is unlikely to generate a sustainable upturn.

For now, potential buyers are advised to stay cautious and avoid overstretching, while policymakers will have to strike a delicate balance between supporting the market and containing risks. The coming months will test whether this rebound has legs or fizzles out like previous ones.