In a concerted effort to stabilize its vital property sector, China's Housing Minister Ni Hong held a press briefing on October 17, 2024, in Beijing. He was joined by officials from the People’s Bank of China, the Ministry of Finance, and the National Financial Regulatory Administration. The government is expanding funding for troubled property developers, easing purchase restrictions, ensuring timely home deliveries, and lowering mortgage rates. These measures are aimed at reviving a sector that has been a significant drag on the economy. [f131c85e]
On October 21, 2024, the People's Bank of China announced a significant reduction in the five-year loan prime rate (LPR) from 3.85% to 3.6%, alongside a cut in the one-year lending rate from 3.35% to 3.1%. This adjustment is expected to lower the monthly mortgage payment for a 1 million yuan loan by approximately 141.5 yuan (US$19.9). These rate cuts are part of broader efforts to stimulate the property market and enhance affordability for homebuyers. [8b7f353a]
During the earlier briefing, Ni announced that loans for 'white list' projects, which prioritize compliant real estate developments, have already reached 2.23 trillion yuan (US$313 billion) and are projected to grow to 4 trillion yuan (US$562 billion) by the end of the year. This expansion is crucial as it addresses the issue of unfinished homes, which has been a major concern for homeowners and investors alike. Additionally, mortgage rate cuts are expected to save households approximately 150 billion yuan (US$21 billion) annually. [f131c85e]
From January to September 2024, the government reported that 1.48 million affordable housing units were built or allocated, reflecting a commitment to increasing housing availability. However, the property sector has faced significant challenges, with investment falling by 10.2% year-on-year in the first eight months of 2024 and home sales slumping by 23.6% year-on-year to 5.97 trillion yuan (US$839 billion). [f131c85e]
Despite these setbacks, October data shows signs of recovery, particularly in first-tier cities where property sales are stabilizing. This uptick in activity comes after a series of measures introduced earlier in the year, including a 0.5% cut in mortgage rates and a reduction in the down payment for second homes from 25% to 15%. [b481b3d5]
Vice-Premier He Lifeng has also emphasized the importance of increasing loans and guaranteeing home deliveries for targeted 'white list' projects, advocating for the inclusion of all eligible residential projects in the white list. As of August, the 'project white list' mechanism has approved 5,392 projects with nearly 1.4 trillion yuan (US$198 billion) in financing. [38cc93d7]
While the government aims to avoid overstimulation and mitigate financial risks, analysts warn that more support is necessary for developers to ensure the timely delivery of projects. Policymakers are also considering favorable tax policies for the property sector, reflecting a comprehensive approach to reviving the market. [3bd9a62d]
As the National Bureau of Statistics prepares to release September property price data, the interplay between local buyer confidence and broader economic factors will be pivotal in determining the sustainability of this recovery. [b481b3d5]