China Rehashes Policies to Stabilize Its Property Market

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Oct 18, 2024 - 10:07 Updated: Oct 17, 2024 - 20:18
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China Rehashes Policies to Stabilize Its Property Market

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The head of the Ministry of Housing and Urban-Rural Development said the goal was to ’stop the [housing] market from falling and return it to stability.’

China’s stimulus-themed public relations blitz continued on Oct. 17 with another high-profile press event. This time, the Ministry of Housing and Urban-Rural Development (MOHURD) led the discussion of stabilizing the country’s housing market.

Ni Hong, head of the MOHURD, rehashed previously announced policies, including removing restrictions on house purchases, sales, and prices, reducing the minimum down payments required for second-home buyers, and decreasing mortgage rates.

He repeatedly said the policies’ goal is to “stop the [housing] market from falling and return it to stability.” He also forecasted an “optimistic result” for October, stating that China’s real estate market had started to bottom out after three years of adjustments.

Ni also said Beijing would increase the loans for “whitelisted” housing projects to 4 trillion yuan (about $562 billion) by the end of the year. China initiated the program in March, which provides failed development projects with special lending by state-owned banks.

According to Xiao Yuanqi, deputy head of the National Administration of Financial Regulation, approved loans for whitelisted projects totaled 2.23 trillion yuan (about $313 billion) as of Oct. 16.

The press conference was the third following one on Oct. 8, led by China’s top economic planner, the National Development and Reform Commission (NDRC), and another on Oct. 12, led by the Ministry of Finance.

So far, all these high-profile events discussed a pending fiscal stimulus to increase spending but came short of delivering the specifics. On Sept. 24, the regime rolled out a surprise package, injecting about 2 trillion yuan ($283 billion) into the market. Since then, the waiting game began for a corresponding fiscal package to address the demand side by boosting consumption.

China’s housing market accounts for about a quarter of its gross domestic product (GDP) and has served as a significant economic growth engine. Local governments depended on the associated land sales for revenue, and housing projects buoyed real estate developers and the financial sector.

Up to 80 percent of Chinese families’ wealth is invested in the property market. However, years of building have led to an oversupply of units. In September 2023, He Keng, former deputy head of the National Bureau of Statistics of China, said that the exact excess level was unknown but mentioned the highest estimate was that China had built twice what the population needed.
An Oct. 7 report by French bank Natixis estimated that the Chinese regime would need to spend 3.4 trillion yuan to buy back idle land and unsold new homes, assuming they can be bought at 70 percent of their market value.
Homeowners saw their units’ prices dropping by 10 to 50 percent in typical real estate markets across the country, according to the China Real Estate Industry Association.

On Sept. 24, China also announced injecting core tier 1 capital—reserves banks hold to run their daily operations and cover potential losses—at six major commercial banks without disclosing the actual amounts.

On Oct. 16, Country Garden, the once-largest mainland Chinese developer by sales now struggling with debt restructuring, said it would host a bondholder meeting on Oct. 18 to discuss early payback of its bonds maturing in December 2024. The company cited the new Sept. 24 policies, including reducing interest rates on existing mortgages and minimum downpayment amounts for second-home buyers.
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