Property stocks rally for second day amid mortgage subsidy rumors

On September 23, real estate stocks continued their strong upward trend. In A-share markets, property service stocks including Huayuan Holdings, I Love My Home, and World Union saw gains. Meanwhile, Hong Kong-listed mainland property stocks also rose in tandem, with Rongxin China surging 22.22%, and several stocks such as Shimao Services, Central China Real Estate, Deson Development, and Fangyuan Life Services posting gains of over 6%.

So, what factors are underpinning this rally in real estate stocks?

Policy Measures Intensify

According to China Times reporting, the direct catalyst for this round of real estate stock gains may have been the press conference held on September 18 by the State Council Information Office, themed "A Strong Start to the 15th Five-Year Plan." At the conference, the Ministry of Housing and Urban-Rural Development issued two major assessments: that the real estate sector has officially entered an era of existing housing stock.

Data released by the Ministry showed that in the first eight months of this year, the floor area of second-hand home transactions signed online reached 549.23 million square meters, a year-on-year increase of 10.6%. Second-hand homes now account for 52% of total market volume. Additionally, the Ministry clarified three foundational systems for the "15th Five-Year Plan" period: the project company system, reforms and improvements to the main bank real estate development financing system, and the sales system.

A research institute under China Index Academy told China Times that it expects various regions to gradually implement policy details in the fourth quarter, translating central government directives into actionable standards. All industry participants will need to proactively adapt to the new normal.

Subsequently, on September 20, the newly revised Regulations on the Management of Housing Provident Funds officially took effect. The most notable change is the expansion of eligible withdrawal scenarios from six to nine, adding categories such as home renovation and payment of property management fees. This marks a shift in the housing provident fund's role from primarily supporting home purchases and rentals to supporting a full-cycle housing consumption model encompassing "renting, buying, repairing, and maintaining."

Earlier, the "August 28" policy package was introduced, proposing a gradual push for presale of completed homes, extension of mortgage loan terms, and reform of industry financing systems. Reporters noted that some cities have already responded positively, specifying conditions for presale of completed homes on newly listed land parcels.

Stabilization Signs in Core Cities

The intensive policy push is also sending positive signals to the market. Data from China Index Academy shows that from September 1 to 20, the floor area of newly built commercial housing sold in 30 key cities saw a slight year-on-year increase of 1.4%. In Beijing and Shanghai, driven by demand-side policy optimizations in August, the market maintained relatively high activity, with new home sales area rising 23% and 22% year-on-year, respectively. Among second-tier cities, Wuhan recorded 450,000 square meters in sales, up 18% year-on-year, while Suzhou and Ningbo saw increases of 29% and 21%, respectively.

The second-hand housing market showed even stronger activity. From September 1 to 20, 82,000 second-hand homes were sold in 20 key cities, a year-on-year increase of 13.1%. Cumulatively, as of September 20, second-hand home sales in these 20 key cities reached 1.08 million units this year, up 6.8% year-on-year. Notably, Beijing and Shanghai have seen year-on-year growth in second-hand home transaction volumes for seven consecutive months, indicating sustained market activity.

"New home sales in first-tier cities continue to grow, but market recovery is concentrated in high-quality segments and projects in core cities, with structural divergence persisting. Second-hand home prices have adjusted more fully, and inventory options are more diverse. This segment will continue to absorb some刚性 demand and replacement demand, and transaction performance is likely to remain relatively active," said Cao Jingjing, General Manager of the Index Research Department at China Index Academy, in comments to China Times.

Real Estate Stocks Rally

So, are the ongoing policy implementations and stabilizing conditions in some cities the main factors supporting the rise in real estate stocks? Yan Yuejin, Vice President of the Shanghai E-House Real Estate Research Institute, told China Times that the stock gains are more closely tied to overall capital market performance. "When the broader capital market performs well, real estate stocks tend to rise easily—that's the current main logic."

"Additionally, the logic behind the real estate stock rally is quite clear. Currently, overall valuations for real estate stocks are low, and there aren't many high-quality real estate stock targets available in the market. The remaining stocks are relatively high-quality. While sales data hasn't shown a very rapid uptick, new home data has shown some signs of bottoming out, which also has a positive effect on the stock market," Yan added.

Furthermore, ahead of the National Day holiday, market rumors have circulated about potential large-scale mortgage interest subsidies. According to these rumors, a nationwide mortgage interest subsidy policy might be implemented just before National Day, with combined central and local subsidies potentially reaching up to 100 basis points, pushing the minimum first-home new loan rate down to 2.05%.

These rumors are not entirely without basis. Previously, cities such as Nanjing, Wuhan, and Chengdu have introduced subsidy plans based on their local market conditions. However, in Yan's view, it seems that around major holidays or key milestones, rumors of policy easing or other supportive measures often emerge, but many are not accurate. "In reality, the rise in real estate stocks has relatively little to do with recent policies," he said.

(Source: China Times Online)