In Shenzhen, China, on March 9, 2016, high commercial and residential buildings are shown against the backdrop of a general economic slowdown in China, during which the property price and stock bubble face significant risks.
Shares of most Hong Kong-listed Chinese property stocks have surged to their highest levels in over a year, driven by China’s ongoing stimulus efforts. The real estate sector emerged as the leading gainer in the Hang Seng Index, with Longfor Group Holdings experiencing a notable increase of over 25%.
Other real estate developers also saw substantial gains. Shimao Group’s shares skyrocketed by over 87%, while Kaisa Group’s shares jumped by 40.48%, both reaching their highest prices in more than a year. China Overseas Land & Investment saw a rise of 12.31%, attaining its highest level since last September. China Vanke’s stock increased by 39.6%, its highest since August 2023. Hang Lung Properties and China Resources Land gained 10.01% and 10.82%, respectively.
Meanwhile, the wider Hang Seng Index added 6%, and the Hang Seng Mainland Properties Index surged by over 14%. Mainland Chinese markets were closed for the Golden Week holiday.
Major cities in mainland China recently introduced new measures aimed at boosting homebuyer confidence, complementing a series of policy stimulus initiatives from the central bank. Guangzhou’s city government announced the removal of all restrictions on home purchases starting Monday, while Shanghai implemented a reduction in the required tax-paying period. Shenzhen also relaxed purchasing restrictions, allowing buyers to purchase an additional apartment in select districts.
Despite these measures, stabilizing the property market and reviving demand will be challenging, as noted by Morgan Stanley in a recent publication. The investment bank’s Asia-Pacific economists highlighted that the property sector’s ongoing struggles would likely result in a significant shortfall in demand, keeping economic growth below target.
Historically, real estate accounted for over 25% of China’s GDP. However, the sector has experienced a prolonged decline since 2020 due to Beijing’s crackdown on excessive debt. Chinese officials have intensified efforts to alleviate financial pressures on households and stabilize the struggling real estate market. Still, these initiatives have not yet led to significant improvements.
