Media365
Chinese property stocks are poised for a comeback, as investors believe that a rebound in tier-one city home prices is a sign that the sector’s years-long woes are nearing an end.
The pickup in home prices in mega cities such as Beijing and Shanghai has coincided with a spike in transaction volumes, indicating that buyers are piling in after prices have fallen to more affordable levels. In March, more than 30,000 lived-in homes were sold in Shanghai, the highest in five years, after the city lowered the threshold for non-residents to buy property.
Emerging green shoots may create a buying opportunity for property stocks that have been battered since home prices peaked in 2021. Many of the industry’s leading players, such as China Vanke, trade well below book value, which means that stocks have priced in the worst and are poised for a sharp bounce-back if headline news remains positive.
“China’s home prices have had significant corrections from the peak,” said Yang Kan, an analyst at Ping An Securities. “The property market has found a foundation for halting declines and stabilising. The sector and relevant stocks are now at a historical low and worth investing in over the medium term.”
New home prices in first-tier cities rose by an average of 0.2 per cent month on month in March, ending nine months of declines, according to official data.
In Shenzhen, where inventories fell by the most among tier-one cities over the past year, a new property launch drew hundreds of buyers, but the scene quickly turned chaotic, forcing a security guard to use pepper spray to disperse the crowd.
