On March 9, 2024, in Beijing, Ni Hong, the Minister of Housing and Urban-Rural Development of China, addressed a press conference, accompanied by officials from various financial and regulatory bodies. During the press conference, the Chinese housing ministry announced plans to expand its “whitelist” of real estate projects and expedite bank loans for unfinished developments. The aim is to increase the funding to 4 trillion yuan (approximately $561.8 billion) by the end of the year.
At present, 2.23 trillion yuan in loans have already been approved for developers on this whitelist, and this figure is expected to nearly double by the end of 2024. The whitelist initiative, launched in January, allows city governments to propose residential projects to banks for faster lending, ensuring the completion of uncompleted housing projects for buyers.
All commercial housing projects are now eligible for inclusion in this whitelist, as stated by Xiao Yuanqi, vice minister of the financial administration. Xiao emphasized the urgency for banks to disburse funds promptly, suggesting that full loan amounts be released to developers instead of in installments.
This briefing follows a series of significant policy announcements aimed at economic stabilization. In September, Pan Gongsheng, the governor of the People’s Bank of China, announced a 50 basis-point reduction in the reserve requirement ratio for banks, alongside a reduction in the minimum down payment for second-home loans from 25 percent to 15 percent nationwide.
Subsequently, in a high-level meeting chaired by President Xi Jinping, Chinese leaders committed to halting the decline in the real estate market and promoting a stable recovery.
Investor optimism surrounding these measures, however, was tempered. Following Xiao’s statements, the Chinese CSI 300 real estate index fell by over 5%, reversing its earlier gains. Meanwhile, China’s Ministry of Finance announced over the weekend that local governments would be permitted to issue additional special bonds for land purchases and allocate affordable housing subsidies for existing housing, not just new construction.
Following these announcements, Chinese property stocks rose, with the Hang Seng Mainland Properties Index increasing by over 2%, and real estate leading gains in the CSI 300 index, advancing nearly 5%.
The Hang Seng Mainland Properties Index had previously experienced a significant decline of over 80% from its peak in 2020. In May, Ni Hong suggested that developers facing bankruptcy should either go bankrupt or undergo restructuring.
China has seen more than 50 cities implementing policies to stimulate the real estate market. Ahead of the Golden Week holiday, Guangzhou removed all home purchase restrictions, while Beijing, Shanghai, and Shenzhen eased homebuying restrictions for non-local buyers and reduced down-payment requirements.
These efforts came in response to previous initiatives that failed to produce substantial market rebounds. New home prices in August fell at the fastest rate in over nine years, according to the National Bureau of Statistics. For the year through August, the value of new homes sold dropped by 23.6%, slightly better than the 24.3% decline noted as of July. Average home prices also dropped by 6.8% month-on-month in August, based on Goldman Sachs’ data.
The real estate sector, which once contributed more than a quarter of China’s GDP, has been suffering since Beijing’s 2021 crackdown on high debt levels, leading to numerous defaults and incomplete housing projects, which have greatly shaken consumer confidence.
This story, contributed by CNBC’s Evelyn Cheng, is developing and will be updated as new information emerges.
