China’s ‘historic’ real estate policies to invigorate sector and promote steady development: Experts

A commercial housing project under construction in Shenyang, Liaoning Province, China, May 18, 2024. /CFP

A commercial housing project under construction in Shenyang, Liaoning Province, China, May 18, 2024. /CFP

China’s announcement of a slate of heavyweight measures for the real estate sector on Friday has been hailed as a historic move by experts. Analysts believe that the new policies will provide a significant boost to the housing market and foster sustained development within the industry.

The wide-ranging policies include cutting the minimum down payment ratios, lowering loan rates of the individual housing provident fund, abolishing the mortgage floor rates, and allowing local government authorities to buy homes at “reasonable” prices to provide affordable housing.

The significant adjustment in financial policies for the property market went beyond market expectations, sending out a clear signal of stabilizing the real estate market, said Dong Ximiao, chief researcher of Merchants Union Consumer Finance Co Ltd, in an interview with Economic Daily. This will help shore up confidence in the housing market and increase residents’ willingness and ability for consumption, Dong added.

A bird’s-eye view of commercial properties in Huai’an, Jiangsu Province, China, May 12, 2024. /CFP

A bird’s-eye view of commercial properties in Huai’an, Jiangsu Province, China, May 12, 2024. /CFP

Echoing this sentiment, Bruce Pang, chief economist and head of research at JLL Greater China, highlighted the pivotal role of the policy combinations in easing the burden of down payments, thereby stimulating consumption. He also noted the policy significance of reducing existing housing inventory and elevating the supply of affordable housing, saying this will help alleviate the structural imbalance between oversupply in commercial housing and undersupply of affordable housing, and better address the housing challenges faced by the working class.

China adjusting the first-home purchase ratio to 15 percent is the most lenient policy in history, observed Yan Yuejin, research director at the Shanghai-based E-house China R&D Institute. “The move is of great significance for the pull in mortgage lending, and the rapid release and scaling of new and improved housing,” He told financial news outlet Yicai.

Yin Zhongli, deputy director of the Institute of Finance and Banking of the Chinese Academy of Social Sciences, lauded the dual-pronged approach of the latest real estate policies, which targets both demand and supply aspects. By deploying new monetary policy tools to mitigate debt risks among real estate developers, Yin contends that these policies will exert a more effective role than initiatives solely focused on demand stimulation.