China has actively implemented targeted measures, such as easing restrictions on purchases or sales, adjusting housing provident fund policies, and lowering mortgage interest rates to better serve the home-buying market and promote the development of the real estate market.
Beset by factors such as COVID-19, an expected drop in personal income and the risks of debt defaults from certain property developers, China’s real estate market has seen contractions this year.
In the first four months of the year, commercial home sales fell 20.9 percent in terms of floor space and 29.5 percent in terms of value.
While the principle that “housing is for living, not speculation” was reiterated, a key meeting of China’s top decision-makers last month called for efforts to improve real estate policies, an important underpinning for the economy.
China’s real estate industry, 10 trillion yuan (about 1.48 trillion US dollars) in size, involves dozens of sub-sectors along the supply chain. Official data showed that the industry’s value-added output accounted for 6.8 percent of the country’s gross domestic product in 2021.
At Monday’s State Council executive meeting, the country once again emphasized that specific city policies will be adopted to meet people’s basic housing needs and their desire to improve housing conditions.
As of May 25, 20 Chinese cities relaxed restrictions on home sales, data from the China Index Academy showed.
“Relaxation of sales restrictions can increase short-term housing supply, improve liquidity in the second-hand housing market, and further unleash demand for better housing conditions,” said Guan Rongxue, an analyst at Zhuge House. Hunter, an online publication. property platform.
Some cities have begun allowing families with more than one child to purchase an additional home under the current restrictions or be exempt from the restrictions, as part of efforts to ease the housing shortage for them and inject vitality into the real estate market.
For cities, especially third- and fourth-tier cities, without home purchase restrictions, adjusting housing provident fund policies is an effective way to support demand.
At least 70 Chinese cities have launched nearly 100 housing provident fund adjustment policies so far this year, focusing on increasing the fee and lowering the down payment ratio of provident fund loans, according to the Index Academy. from China.
Chen Wenjing, director of research at the academy, believes that more cities will optimize relevant policies to strengthen the guarantee function of the housing provident fund.
The country’s financial authorities have recently sent clear signals to support the growth of real estate credit.
A circular published jointly by the People’s Bank of China and the China Banking and Insurance Regulatory Commission on May 15 allowed commercial banks to lower the lower limit of mortgage loan interest rates by 20 basis points for home buyers. first home, according to the tenor of the reference index. loan prime rate (LPR).
On May 20, China announced that it would lower the five-plus-year LPR, on which many lenders base their mortgage rates, by 15 basis points to 4.45%, which will also help the real estate market maintain stable development. and stimulate general demand.
Noting that a healthy real estate market plays a positive role in stabilizing economic growth, Xu Xiaole, a senior analyst at China real estate brokerage platform Beike, said measures should be taken to boost the sector’s virtuous cycle.
Real estate policies, however, should not be used as a short-term economic stimulus, he said.
The country should strive to maintain the continuity and stability of its regulatory measures, strengthening the precision and coordination of policies, in a bid to anchor housing prices and market expectations, said Feng Jun, director of the Association of Chinese Real Estate.
(Cover photo via CFP)