Realtors get inventive to beef up sales amid property slowdown

A potential house buyer at a real estate promotion event in Beijing. The Chinese property market is expected to face pressure next year due to the economic slowdown. [Photo / Provided to China Daily]

China's real estate market is due to come under pressure next year because of the slowdown in economic growth, with property developers strengthening their marketing campaigns to stimulate sales.

The total contracted sales of the residential property market are expected to decline by 5 to 10 percent this year compared to 2013, largely due to the drop in sales volume, according to a report by Moody's Investors Service.

"China's weak residential property sales year-to-date were largely driven by lower transaction volumes. We expect price pressure to increase over the next few months," said Franco Leung, vice-president and senior analyst at Moody's. "Many of the 70 major cities are expected to report month-on-month price declines over the next few months."

Of the government's 70 sample cities, 69 saw a price drop in September compared with the previous month, while the remaining one saw prices flatline, according to the National Bureau of Statistics.

A senior executive with a Hong Kong-listed developer who declined to be named is not optimistic about the prospects for next year, saying that the expected slowdown in China's economy will inevitably hit the property sector, even with the government's recent policies to stimulate demand.

JP Morgan lowered its 2015 forecast for China's GDP growth to 7.2 percent, down from the previous 7.3 percent, according to a report issued on Nov 9. UBS's forecast is more pessimistic, with 6.8 percent predicted for 2015 and 6.5 percent for 2016.

The 5 to 10 percent year-onyear fall in the contracted sales of 2014, however, is less than the 10.9 percent decline in the first eight months of this year compared to last year, primarily driven by the expected quarter-on-quarter growth in the fourth quarter this year, the Moody's report said.

Factors driving up growth in the last three months include improving mortgage availability, shortening mortgage approval and disbursement periods, more new projects launched by developers, and the continued relaxation of home purchase restrictions by local governments.

The new policy on mortgages released at the end of September is believed to be the most effective measure in warming up the property market, industry experts say.

The easing of rules allows mortgages on second homes to be treated in the same way as a first mortgage, as long as the buyer has paid off the first loan. Other stimulus measures include the relaxation of terms in withdrawing housing provident funds to pay rent and bolstering the building of subsidized housing.

Kou Hailong, general manager for Beijing with real estate agency Century 21, says there was an evident rise in sales during the last two weeks of October. "Between Oct 20 and 31, a total of 6,095 contracts were signed in the pre-owned housing sector, increasing 51.1 percent month-on-month," says Kou.

"The figures of the deals in October showed that the stimulating effect of the favorable policy on mortgages is being felt, and it is expected that transactions in November will keep going up as a result of a couple of favorable policies being executed, probably reaching a record high this year."