China’s central and local authorities are fine-tuning housing policies to strike a balance between defusing risk and stimulating demand, as part of efforts to spur the steady and healthy development of the property market.
While reiterating the principle that “housing is for living, not speculating,” a key meeting held last week by the Political Bureau of the Communist Party of China Central Committee called for efforts to improve housing policies based on local realities.
Giving a boost to both demand and supply, he called for support to meet demand from first-time buyers and home renovators and for prepayment regulations to be optimized for commercial accommodation.
China’s 10 trillion yuan (about US$1.5 trillion) real estate industry, involving dozens of sub-sectors along the supply chain, has been a key pillar of the ‘economy. Official data showed that the industry’s value-added output accounted for 6.8% of the country’s gross domestic product in 2021.
However, influenced by the resurgences of the COVID-19 epidemic, the risks of default by some real estate developers and the expected decline in personal income, the real estate market has seen contractions in the main performance indicators.
In the first three months of this year, the area of new housing construction in the country decreased by 17.5% year-on-year. Commercial home sales fell 13.8% in terms of floor space and 22.7% in terms of value.
Market analysts have noted that rising risks on developers have prompted banks or other financial institutions to tighten funding, while high mortgage interest rates, among other factors, impose additional burdens on potential consumers. These factors caused sales to plummet.
Against this backdrop, the key meeting sent positive signals to China’s real estate market, prioritizing the stability of the sector, according to Liu Lin, a researcher at the Chinese Academy of Macroeconomic Research.
This has enabled local authorities, while de-risking, to unveil more targeted and flexible policies, optimize regulatory measures for land rental and increase the supply of government-subsidized housing to support the market. , Mr. Liu said.
To this end, several ministries have announced adjustments to regulatory measures as a new impetus in the industry.
A case in point is a recent financial policy symposium organized by the central bank of China and the main banking regulator. He underscored the importance of adapting regional housing credit policies to meet the diverse demands across the country.
On the financial side, the symposium called on financial institutions to manage real estate financing prudently, to avoid interrupting or delaying the granting of loans to real estate developers and to ensure appropriate management of financial risks.
The fine-tuning task is even more detailed at the local level, with some 120 cities across the country implementing various policy adjustments in the first four months of this year, data from Centaline Property, a real estate agency, showed.
These included easing restrictions on buying or selling properties, reducing down payments, allocating grants and providing financial support to developers.
With the increase in housing availability and the streamlining of mortgage approval procedures, consumer housing demand will be unleashed in some cities, said Fu Linghui, an official with the National Bureau of Statistics. Fu expected the decline in home sales to narrow.
Since 63.9% of its population are urban residents, China maintains a rapid rate of urbanization. The number of urban employees is increasing by more than 11 million every year, driving a strong demand for housing.
Feng Jun, head of the China Real Estate Association, said that while differentiated policy-making is encouraged, all local governments should cling to the principle that “housing is for living in, not for speculation”, and must not engage in real estate policy. as a short-term economic stimulus.
The country should strive to maintain continuity and stability in its regulatory measures, with enhanced policy precision and coordination, in a bid to anchor housing prices and market expectations, Feng added.