Bigger developers and local governments rolled out incentives to bring buyers back. Since February, at least 26 of 32 Chinese provinces and regions have unveiled policies to boost their property markets, according to Huatai Securities, including looser down-payment requirements and subsidies for home purchases.
"While local governments are under pressure to prevent further surges in housing prices, what scares them more is a sharp decline," said Gao Fei, general manager at real-estate firm Centaline Group in Tianjin. They can ill afford to let the market go down. Income from land sales and related taxes on developers accounted for 52.9% of local governments' revenue in 2019, a record high, according to Shanghai Yiju Real Estate Research Institute.
Yet, in a sign the central government disapproves of some of the loosening measures, in at least 12 cities, including Jinan and Guangzhou, documents detailing relaxed lending policies were removed from local governments' official websites within days. One city in Shandong province backed off plans to provide subsidies to home buyers in mid-May, saying some parts of its plan "violate relevant requirements from senior officials."
China Evergrande, whose enormous debts give it the largest interest bill in the world among listed nonfinancial stocks, according to Capital IQ data, offered discounts of 25% in February and 22% in March. Country Garden Holdings, another major developer, offered more than 17,000 new homes across China via social media with discounts of up to 50%.
Among China's 34 largest developers, 27 reported a year-over-year increase of sales volume in May, according to data from China Real Estate Information Corporation.
More recently, incentives have been trimmed, though not entirely. At one development in Shanghai in mid-May, CK Asset Holdings offered prospective buyers a Huawei phone and vouchers of 20,000 to 40,000 yuan ($2,800 to $5,600) for future apartment-management fees.
In other developments, no discounts were on offer, and would-be buyers had to enter lotteries to access the smaller and cheaper apartments. China Vanke Co. sold apartments in mid-May worth a total of 148 million yuan ($20.8 million) within four hours online in a live-streaming show hosted by an actress.
Yin Haiping, who runs a property consulting firm in Shenzhen, said fear of losing out is driving more buyers to look now, with home prices in some desirable areas up by at least 10% this year.
Xu Xiaohua, a university lecturer in Tianjin who already owns a property there, just bought another apartment this month in Shenzhen. He paid 6.5 million yuan ($913,050) in cash in early May for the 50-square-meter (538-square-foot) property after checking out about a dozen apartments within a week.
He said he thinks most Chinese will park their wealth in real estate during downturns. "The worse China's economy turns," he said, "the higher property prices in places like Shenzhen will climb."
--Bingyan Wang and
Zhou Wei
contributed to this article.
Write to Stella Yifan Xie at stella.xie@wsj.com and Mike Bird at Mike.Bird@wsj.com
