(XINHUA) – BEIJING, MAY 06 – China’s central and local authorities are refining housing policies with the aim of trying to strike a balance between reducing risk and stimulating demand in efforts to promote the development of a stable and healthy housing market.
By reiterating the principle that “homes are for living in, not for speculation”, a key meeting held last week by the Political Bureau of the Central Committee of the Communist Party of China called for efforts to improve property policies based on local realities.
By giving a new impetus to both supply and demand, the institution has sought support to meet both buyers’ demand for their first home and its modernization, as well as the optimization of the regulation on prepayment for housing.
China’s real estate industry, which spans 10 trillion yuan (about $ 1.5 trillion) and spans several sub-sectors in the supply chain, has been a significant support to the economy. Official data showed that the added value of the sector in 2021 was 6.8% of the country’s gross domestic product.
Affected by the resurgence of the Covid-19 epidemic, by the risks of debt default among some real estate entrepreneurs and by the forecast for the fall in income per capita. per capita, the real estate market has noticed contractions in the main performance indicators.
In the first three months of this year, the area of new construction in the country fell by 17.5% year-on-year, and sales of commercial housing fell 13.8% measured in floor area and 22.7% in value.
Market analysts noted that growing risks for developers led banks or other financial institutions to cut funding, while high mortgage rates, among other factors, put additional strain on potential consumers. The result was a decline in sales.
In this context, the crucial meeting sent positive signals to the Chinese real estate market and prioritized the stability of the sector, according to Liu Lin, a researcher at the Chinese Academy of Macroeconomic Research.
In fact, the meeting allowed local authorities, while circumventing the risks, to present more targeted and flexible policies, to optimize regulatory measures for land lease and to increase the supply of state-subsidized housing in order to support the market, Liu said.
To this end, several government departments have announced adjustments to regulatory measures as new stimuli for the industry.
An example of this is a recent fiscal policy symposium hosted by the Chinese central bank and the leading banking regulator, which stressed the importance of adapting specific regional property credit policies to meet different requirements across the country.
On the financial front, the symposium urged financial institutions to manage property financing prudently, to avoid blocking or delaying the issuance of loans to construction contractors and to ensure appropriate management of financial risks.
The refinement work is even more detailed at the local level, with around 120 cities nationwide implementing several policy adjustments in the first four months of this year, according to data from real estate agency Centaline Property.
The adjustments include easing restrictions on the purchase or sale of property, reduction of disbursements, granting grants and providing financial support to entrepreneurs in the sector.
With increased housing availability and simplified mortgage approval procedures, consumer demand for housing will be triggered in some cities, said Fu Linghui, an official at the National Bureau of Statistics, who expects the decline in home sales to decline.
Given that 63.9% of China’s population consists of urban dwellers, the country maintains a high pace of urbanization. The number of city employees is increasing by over 11 million every year, leading to a strong demand for housing.
Feng Jun, director of the China Real Estate Association, said that although policy differentiation is encouraged, all local governments must adhere to the ‘houses to live in, not speculate’ principle and must not trade in property policy as a short-term economic stimulus.
The country should strive to maintain the continuity and stability of its regulatory measures, with precision in policies and strengthened coordination, in an effort to anchor house prices and market expectations, Feng added. (XINHUA)