China pledges more financial support for ‘whitelist’ real estate projects
A pedestrian crosses a road in front of residential buildings in Beijing, China.
Qilai Shen | Bloomberg | Getty Images
China vowed more financial support for real estate projects that fall under its so-called whitelist and to speed up banks lending of 4 trillion yuan ($561.8 billion) for such projects, according to the nation’s housing ministry.
Ni Hong, China’s minister of housing and urban-rural development, delivered the remarks at a press conference on Thursday, alongside officials from the central bank, financial ministry and the National Financial Regulatory Administration.
A total of 2.23 trillion yuan has been approved in loans to whitelisted developers, and that figure is expected to exceed 4 trillion yuan by the end of this year, according to a senior official from the financial regulator.
The event marks the latest in a series of high-level economic policy briefings, which started late September.
Investors have seen recent stimulus announcements as a signal that Beijing is finally stepping in to stimulate slowing economic growth, as well as its struggling property sector. Ni had told reporters at a press conference in May that developers “that must go bankrupt, should go bankrupt, or be restructured.”
Over the weekend, officials from China’s Ministry of Finance announced that they would allow local governments to issue more special bonds for land purchases and allow affordable housing subsidies to be used for existing housing inventory, instead of only new construction.
Chinese property stocks soared on Monday off the news, with the Hang Seng Mainland Properties Index rising over 2%. Real estate was also the leading gainer in Mainland China’s CSI 300, advancing by nearly 5%. The HSMPI had lost more than 80% from its peak in January 2020.
Throughout the week, Chinese stocks overall have been volatile as investors diverged in their opinions on whether the government would deliver the stimulus needed to boost the economy. Ahead of the press conference Thursday, the market rallied again, indicating some hope that China would soon deliver some concrete stimulus policies.
In late September, Pan Gongsheng, the People Bank of China governor announced a 50 basis-point cut to the amount of cash banks need to have on hand, known as the reserve requirement ratio or RRR. He also lowered the minimum down payment for second-home loans nationwide from 25 percent to 15 percent.
Days later, officials in a top-level meeting, chaired by Chinese president Xi Jinping, pledged to “halt the real estate market decline and spur a stable recovery.”
More than 50 cities across China had introduced policies to boost the real estate market, according to Chinese state media citing the housing ministry.
Ahead of the Golden Week holiday, the city of Guangzhou announced it will remove all restrictions on home purchases. Meanwhile the governments of Beijing, Shanghai, Shenzhen moved to ease homebuying restrictions by non-local buyers and lowered the minimum down-payment ratios.
The slew of measures came after China’s previous measures had led to little meaningful rebounds. New home prices in August dropped at the fastest pace in more than nine years, according to the National Bureau of Statistics data.
The value of new homes sold fell by 23.6% for the year through August, slightly better than the 24.3% drop year-to-date as of July. Average home prices fell by 6.8% in August from the prior month on a seasonally adjusted basis, according to Goldman Sachs.
The real estate sector — once accounted for more than a quarter of China’s economy — had been in a painful downturn since 2021, when Beijing launched a crackdown on the sector’s high debt levels, sending a slew of developers to default on their debts and leave many housing projects unfinished. That had severely dampened homebuyers confidence in the market.
— CNBC’s Evelyn Cheng contributed to this story.
This is a developing story. Please check back later for updates.
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