China Property Shares Rally Then Retreat on New Home Sales and Financing Rules

On August 31, the A-share real estate sector opened actively, with multiple stocks hitting the daily limit. Tefa Service rose by the 20% limit, while Financial Street, Yufaka, Xiangjiang Holding, Shenzhen Properties A, Zhongjiao Development, and Tianbao Infrastructure gained more than 10%. Guangyu Group, Shilianhang, and 5i5j rose more than 9%. The three major A-share indices opened lower, and some property stocks that had hit the daily limit at the open later saw their limit-up status broken. During intraday trading, Tefa Service rose 13.53%, Zhongjiao Development rose 5.98%, Jingtou Development rose 4.9%, and Financial Street rose 5.88%. Yufaka, Shenzhen Properties A, Tianbao Infrastructure, Guangyu Group, Shilianhang, and 5i5j maintained their one-word limit-up status. Hong Kong-listed property stocks opened sharply higher but generally retreated after the open, with some turning from gains to losses.

On August 28, the Ministry of Housing and Urban-Rural Development and other departments jointly issued the "Notice on Improving the Sales System for Commercial Housing," clarifying that the implementation of sales of completed homes should be accelerated. On the same day, the National Financial Regulatory Administration, together with the People's Bank of China and the Ministry of Housing and Urban-Rural Development, issued five real estate financing management systems covering commercial housing development loans, individual housing loans, commercial property loans, urban renewal project loans, and trust business in the real estate sector. Among them, the "Measures for the Management of Individual Housing Loans (Trial)" includes adjustments such as changing the timing of loan disbursement for presold commercial housing, optimizing the upper limit of the income-to-debt ratio, extending the maximum loan term, and making arrangements for "transfer with mortgage" on second-hand homes. The measures specify that the maximum term for individual housing loans shall not exceed 40 years. Borrowers may negotiate with lenders on repayment plans. For loans with a term of one year or less, repayment can be made in a lump sum at maturity or on a monthly basis. For loans with a term exceeding one year, repayment shall be made on a monthly basis.