(Yicai Global) March 2 -- Boosted by a number of favorable policies, Wuhan, the capital of China’s central Hubei province, sold 12,421 newly built apartment units in February, hitting a 17-year high for monthly sales, according to the latest local government data.

The figure was 87.2 percent higher than January and 108.5 percent up on February last year.

The market recovery is showing up in the sales offices of residential property projects across Wuhan. After the Chinese New Year holiday, the number of potential buyers visiting sales offices in the city increased by one to three times compared with before the break. In fact, the Wanhe Jingjie project located in the Optics Valley development zone sold out on opening day, with projects in other parts of the city selling fast.

As the number of transactions has risen, some projects have begun to withdraw promotional offers, and notices like ‘Discounts to be cancelled; prices to increase soon” can been seen in many sales offices across Wuhan.

Wuhan government data also showed that the average price of new homes in February was CNY16,210 (USD2,349) per square meter, up 0.45 percent from January. It marked a four month of gains after 11 consecutive months of decline. The current average price is already higher than that in 2019.

But Li Guozheng, director of the Market Research Center of the China Index Academy (Central China), sounded a note of caution about February’s high-growth data. He told Yicai Global that since the lunar new year holiday fell in February in 2022 and the January this year, the comparative bases were both relatively low.

In fact, the recovery in Wuhan’s real estate market is not borne out by most projects, Li pointed out, saying that only projects in the main urban area or some cost-effective projects have been popular, leading to a significant rise in transactions in February. For example, the number of new builds in the main urban area accounted for 64 percent of all transactions.

However, the market in most new urban areas is still not hot enough, with certain projects having been in market for more than 20 months in some districts, so destocking is still hard, he noted.

Wuhan’s residents also still regard the ‘safety’ of funds as a key decision-making factor when choosing projects, so most of the hot-selling projects are mainly real estate developed by major state-owned developers or listed builders with a stable financial status, with the sales of projects developed by firms with a history of financial troubles still quite low, Li noted.

So although the city’s property market rebounded well in February, the support of more favorable policies is still a must in the short-term if the property market continues to pick up, he said.

Editors: Tang Shihua, Peter Thomas