(Yicai) Oct. 8 -- Sales by China’s top 100 property developers picked up in September from the previous month, supported by government policies and the traditionally strong autumn sales season. Industry analysts said the recovery’s sustainability will depend on the implementation of these supportive policies and a revival in market confidence.

The country's top 100 real estate firms logged a 13.5 percent surge in combined contracted sales last month from the month before to CNY242.1 billion (USD36.1 billion), according to the latest data from the China Index Academy. In the first nine months, they recorded combined contracted sales of CNY2.26 trillion (USD337.2 billion).

The rebound was driven by two main factors. September is traditionally a peak sales period for developers, while demand-side support measures rolled out by major cities at the end of August also helped. Some projects in key cities such as Shanghai, Beijing, Chengdu and Hangzhou recorded strong sales due to their advantageous locations and competitive products.

On Aug. 28, the Ministry of Housing and Urban-Rural Development, the Ministry of Natural Resources, and the National Financial Regulatory Administration, among other government agencies, released a policy document aimed at overhauling the basic framework governing real estate development, financing and sales. This initiative aims to accelerate the establishment of a new model for real estate development, with a particular focus on the sale of completed homes.

The Ministry of Housing and Urban-Rural Development explicitly stated for the first time at a Sept. 18 press conference that the real estate sector is experiencing "two shifts." First, there has been a significant shift in the supply and demand dynamics of the real estate market. Second, the sector has officially entered an era of existing housing stock. The ministry said a new development model for the property sector needs to be established.

Subsequently, cities such as Beijing, Shanghai and Guangzhou introduced detailed measures on the sale of completed homes and higher thresholds for pre-sales.

The new policies are likely to lengthen the period during which developers’ capital is tied up and change their land-acquisition and investment strategies, according to the China Index Academy. Their impact is expected to become increasingly visible from next year. Land auctions during the year-end peak in land supply, together with the implementation of detailed local rules, will provide important indicators to watch, the academy said.

Supportive policies on the demand side are also being rolled out. On Sept. 29, the Ministry of Finance, the People's Bank of China and the National Financial Regulatory Administration jointly issued a notice regarding the implementation of interest subsidies for residential mortgage loans. Starting Oct. 1, eligible first-time homebuyers will receive financial subsidies on commercial mortgage loans.

Looking ahead to the fourth quarter, industry analysts expect the impact of the new policies to gradually become more apparent. In the short term, developers are likely to accelerate the process of obtaining permits for projects in order to shorten the period during which their capital is tied up. Combined with the new mortgage interest subsidy policy and the low comparison base from last year, the decline in developers’ sales is expected to narrow further.

Editor: Kim Taylor