China has actively launched targeted measures such as easing restrictions on purchases and sales, adjusting housing provident fund policies, and lowering mortgage interest rates to better meet the needs of the housing market and promote the development of the real estate market.
China’s property market has contracted this year, beset by factors including COVID-19, lower personal income expectations and the risk of debt defaults by some property developers.
In the first four months of this year, commercial housing sales fell by 20.9% in terms of floor area and 29.5% in value.
While reiterating the principle that “houses are for living in, not for speculation”, a major meeting of China’s top policymakers last month called for efforts to improve real estate policies, an important underpinning of the economy.
China’s real estate industry is worth 10 trillion yuan (about 1.48 trillion U.S. dollars) and involves dozens of sub-sectors throughout the supply chain. Official data show that in 2021, the added value of the industry will account for 6.8% of GDP.
At the executive meeting of the State Council on Monday, the state re-emphasized that it would adopt city-specific policies to meet the basic housing needs of the people and their desire to improve housing conditions.
As of May 25, 20 Chinese cities had eased restrictions on home sales, data from the China Index Academy showed.
“Easing sales restrictions can increase housing supply in the short term, improve liquidity in the second-hand housing market, and further unleash demand for better housing conditions,” said Guan Rongxue, an analyst at Zhuge Orion. property platform.
Some cities are beginning to allow families with many children to buy additional homes or unrestricted under current restrictions to ease their housing shortages and breathe life into the housing market.
For cities without purchase restrictions, especially in third- and fourth-tier cities, adjusting the housing provident fund policy is an effective way to boost demand.
According to data from the China Index Academy, at least 70 Chinese cities have issued nearly 100 housing provident fund adjustment policies so far this year, focusing on increasing the provident fund loan amount and reducing the down payment ratio.
Chen Wenjing, director of the research department of the research institute, believes that more cities will optimize relevant policies and strengthen the protection function of housing provident fund.
The country’s financial authorities recently issued a clear signal to support real estate credit growth.
On May 15, the People’s Bank of China and the China Banking and Insurance Regulatory Commission jointly issued a notice to allow commercial banks to lower the lower limit of housing loan interest rates for first-time homebuyers by 20 basis points on the basis of benchmark interest rates. Loan Prime Rate (LPR).
On May 20, China announced that it will cut its LPR over five years by 15 basis points to 4.45%, which will also help the property market maintain stable development and stimulate overall demand.
Xu Xiaole, a senior analyst at Chinese real estate brokerage platform Beike, pointed out that a healthy real estate market has a positive effect on stabilizing economic growth, saying measures should be taken to promote a virtuous circle in the industry.
However, he said real estate policy must not be used as a short-term economic stimulus.
Feng Jun, president of the China Real Estate Association, said that the state must strive to maintain the continuity and stability of regulatory measures, and strengthen policy precision and coordination to stabilize housing prices and market expectations.
(Cover photo via CFP)