A pedestrian crosses the road in front of a residential building in Beijing, China.
Shen Qilai | Bloomberg | Getty Images
China has pledged to provide more financial support to real estate projects on the so-called white list and speed up bank loans of 4 trillion yuan ($561.8 billion) for such projects, according to the Ministry of Housing and Urban-Rural Development.
China’s Housing and Urban-Rural Development Minister Ni Hong made the remarks at a press conference on Thursday, which was also attended by officials from the central bank, the Ministry of Finance and the State Financial Supervision Administration.
A senior official at the financial regulator said that a total of 2.23 trillion yuan in loans to whitelisted developers had been approved, and the figure was expected to exceed 4 trillion yuan by the end of this year.
The event was the latest in a series of high-level economic policy briefings that began in late September.
Investors view the latest stimulus package as a sign that Beijing is finally stepping in to stimulate slowing economic growth and a troubled real estate industry. Ni told reporters at a press conference in May that developers “should go bankrupt or reorganize if they must go bankrupt.”
Over the weekend, Chinese finance ministry officials announced they would allow local governments to issue more bonds earmarked for land purchases and allow affordable housing subsidies to be used on existing housing stock, not just new construction.
Chinese real estate stocks surged on Monday on the news, with the Hang Seng Mainland Real Estate Index rising more than 2%. The real estate sector was also the sector with the largest increase in the CSI 300 Index, rising nearly 5%. The HSMPI is down more than 80% from its peak in January 2020.
China’s stock market has been volatile overall this week as investors are divided over whether the government will introduce the stimulus needed to boost the economy. Markets were rising again ahead of Thursday’s press conference, signaling some hope that China will soon unveil some concrete stimulus policies.
In late September, Pan Gongsheng, governor of the People’s Bank of China, announced a 50 basis point cut in the amount of cash required by banks, known as the deposit reserve ratio, or RRR. He also lowered the national minimum down payment for second-home loans from 25% to 15%.
Days later, officials pledged to “curb the decline in the property market and promote a stable recovery” at a high-level meeting chaired by Chinese President Xi Jinping.
According to statistics, more than 50 cities across the country have launched real estate market revitalization policies. Chinese state media quoted the Ministry of Housing and Urban-Rural Development as saying.
On the eve of the Golden Week holiday, Guangzhou announced the lifting of all house purchase restrictions. At the same time, the governments of Beijing, Shanghai, and Shenzhen have relaxed home purchase restrictions for non-local home buyers and lowered the minimum down payment ratio.
China has introduced a series of measures after previous measures brought little meaningful backlash. New house prices fall in August at the fastest pace in nine yearsAccording to data from the National Bureau of Statistics.
The value of new home sales fell 23.6% for the full year through August, slightly better than the 24.3% decline year-to-date through July. Goldman Sachs said that on a seasonally adjusted basis, average house prices fell 6.8% in August from the previous month.
The real estate industry, which once accounted for more than a quarter of China’s economy, has been in a painful downturn since 2021, when Beijing cracked down on high debt levels in the sector, leading to scores of developers defaulting and many businesses going bankrupt. The project is not completed. This has severely damaged homebuyers’ confidence in the market.
—CNBC’s Evelyn Cheng contributed to this article.
This is a development story. Please check back later for updates.
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