China Home Sales Rebound in March

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China’s property market is showing signs of green shoots again with home sales posting a robust recovery in March.

After contracting in the first two months of 2019 -- including over the Lunar New Year holiday, a time when at least for the past three years residential purchases have typically been buoyant -- the project sales of nine major developers rose 20 percent in March from a year earlier.

Aiding the recovery has been stimulus from Beijing, which has helped stabilize the economy and re-ignite home buyers’ enthusiasm. Economists expect the central bank will cut reserve requirements at least three more times this year to funnel cash into a slowing economy. Additional so-called stealth easing measures that make it easier to buy property in China have also improved sentiment.

A nationwide promotion with sweeping discounts resulted in China Evergrande Group posting a rise in contracted sales of 11 percent last month, reversing the company’s 42 percent year-on-year slump in the first two months. At Shanghai-based Cifi Holdings Group Co., March sales were up 87 percent.

Bloomberg calculations based on official data also show that home builders received faster cash proceeds from banks in January and February. In China, when home buyers take out a mortgage, that money flows to the project developer. When liquidity worsens, developers receive those proceeds more slowly.

Analysts at Credit Suisse Group AG say such signs of recovery are just the start. The bank on Tuesday said it expects home prices nationwide to increase by 1.4 percent on average in 2019 and 2.3 percent in 2020, and reckons developers with quality land banks should outperform.

©2019 Bloomberg L.P.