China‘s Ministry of Housing and Urban-Rural Development (MOHURD) recently held a press event to discuss measures aimed at stabilizing the country’s housing market. During the event, Ni Hong, head of MOHURD, reiterated previously announced policies such as lifting restrictions on house purchases, sales, and prices. Additionally, the minimum down payments required for second-home buyers would be reduced and mortgage rates decreased.
Ni emphasized that these policies were implemented to prevent further decline in the housing market and restore stability. He expressed optimism about October’s results, stating that China’s real estate market had begun to stabilize after three years of adjustments.
Furthermore, Ni announced that Beijing would increase loans for ”whitelisted” housing projects to 4 trillion yuan ($562 billion) by year-end. This program was initiated in March and provides failed development projects with special lending from state-owned banks. According to Xiao Yuanqi from the National Administration of Financial Regulation, approved loans for whitelisted projects amounted to 2.23 trillion yuan ($313 billion) as of October 16.
This press conference marked the third high-profile event following discussions led by China’s top economic planner, the National Development and Reform Commission (NDRC), on October 8th and by the Ministry of Finance on October 12th. While these events hinted at a pending fiscal stimulus package to boost spending, specific details have not yet been provided.
China’s housing market plays a significant role in its gross domestic product (GDP) and has been a key driver of economic growth. Local governments rely on land sales associated with housing projects for revenue generation while real estate developers and financial sectors benefit from these projects.
However, excessive construction has left many projects unfinished. In September 2023, He Keng from China National Bureau of Statistics stated that there was significant overbuilding in the country but exact figures were unknown; some estimates suggest China has built twice as much as needed based on population size.
A report by French bank Natixis estimated that it would cost approximately 3.4 trillion yuan ($478 billion) for the Chinese government to repurchase idle land and unsold new homes if they could be acquired at 70 percent of their market value.
Homeowners across various real estate markets in China have witnessed price drops ranging from 10 percent to 50 percent according to data from the China Real Estate Industry Association.
On September 24th, China also announced injecting core tier-1 capital into six major commercial banks without disclosing specific amounts.
Struggling developer Country Garden recently revealed plans for an early payback discussion regarding its bonds maturing in December 2024 due to new policies introduced on September 24th which included reduced interest rates on existing mortgages and minimum downpayment amounts for second-home buyers.