Gov’t unveils new property stimulus measures

The Chinese government has rolled out a series of measures aimed at reviving the country’s struggling property market, as new home prices in the country fell at their fastest pace in over eight years in March.

Last Friday, the government announced a re-lending program totaling RMB300 billion to support home purchases. This comes on the heels of other initiatives, such as relaxing home purchase restrictions and urging banks to expedite loan approvals, as well as lowering the minimum down payment for private residential mortgages. In May 2024, China lowered down payment requirements to 15% for first-time buyers and 25% for second-time buyers, making homes more accessible.

Beijing has received more inquiries from prospective homebuyers in the past month, both online and offline, with property sales surging over 70% compared to the beginning of the year.

The Hang Seng Mainland Properties Index, which tracks Chinese property developers listed in Hong Kong, was up 1.80% in afternoon trading yesterday.

Mark Dong, co-founder and general manager of Minority Asset Management in Hong Kong, said to Reuters, “There certainly is hope that the central and local governments will introduce more supportive measures. But apart from more interest rate cuts, other measures like capital support from local governments will be quite hard to implement, as we know they are facing constrained resources themselves.” JPMorgan also echoed this sentiment, noting that a sustainable rally in the sector would require a meaningful sales recovery and stronger policy responses.

Most experts agree that the property sector will continue to negatively impact China’s economy this year, with the government aiming for a 5% gross domestic product growth. Bloomberg quotes ING that a potential bottoming out of housing prices would only be the first step in the recovery process. Nadia Shaw