New policies to boost property sector, facilitate recovery

Long-term benefits expected following supportive central government measures

With a high frequency of supportive measures issued by financial regulators in November, the property market is expected to see a turning point in 2023 as market recovery continues to proceed, industry experts said.

Since the beginning of November, the nation's financial regulatory departments have launched a wide range of policies one after another, covering credit, bonds, equity financing, presale supervision funds, and mergers and acquisitions of real estate developers, among others to ensure the property market's stable and healthy development.

"These policies and gestures made from the central government level are extremely meaningful and the convergence of their effect will help boost market confidence and facilitate recovery," said Wang Xiaoqiang, chief analyst with the Zhuge Real Estate Data Research Center.

Although there remain uncertainties in the short term, Wang sees that supportive financial policies will strengthen market confidence, overcome the negative impacts of COVID-19 and enable the real estate market to recover at an accelerated pace.

Wang further expects the market to witness positive growth year-on-year by the middle of next year.

The latest policies were introduced on Nov 28, when China's real estate enterprises were allowed to resume refinancing and mergers and acquisitions after a 12-year suspension by the top securities regulator — the China Securities Regulatory Commission.

This move will join forces with previous loosening measures by financial regulators in supporting credit expansion and bond financing to create a more friendly environment and better opportunities for property developers' refinancing, said Yan Yuejin, director of the Shanghai-based E-house China Research and Development Institution.

Among all the policies and measures introduced, the executive meeting of the State Council — China's Cabinet — held on Nov 22, is viewed as particularly significant.

"The State Council meeting is held at a crucial time as the nation's overall economy is in the process of stabilization," said Li Yujia, chief researcher at the provincial residential policy research center of Guangdong province.

According to Li, the meeting noted that measures of supporting reasonable demand should be carried out according to each city's own conditions, stipulated that lending set aside for presold projects' construction and delivery be provided fully and swiftly, and encouraged commercial banks to issue special loans aimed at ensuring housing project delivery.

The State Council meeting did not simply reiterate previous policies, but gave guidance for local governments to work out their tailored measures, which is helpful to stabilize the market and shore up consumption, said Yan.

By loosening the lending curbs for presold projects to facilitate the handover of buildings, the State Council strived to improve the balance sheets of the property industry and promote the healthy development of the real estate sector, Yan said.

Under such guidance, future policies will be easily understood and executed, whether it is property developers, commercial banks, home sales agencies or households, Yan added.

According to Li, the issues the State Council addressed have been reflected in the 16-point set of financial measures jointly released by People's Bank of China — the central bank — and the China Banking and Insurance Regulatory Commission, on Nov 23.

The 16-point set of financial measures provide guidance for loans throughout the real estate industry chain that ranges from initial financing and housing project development to mortgages borrowed by individuals, Li added.

The circular has been immediately responded to by several commercial banks including Agricultural Bank of China, Bank of Communications and Bank of China to reach strategic collaborations with property developers since Nov 23. Industry experts expect more commercial banks to follow suit.

The cooperative agreements are in line with the spirit of recent policies that call for national commercial banks to take the responsibility to support prime real estate developers to grow by stabilizing property loans, Liu Shui, head of research with the China Index Academy's corporate division, was quoted as saying by ThePaper.cn.

The central government's support for the real estate market was unprecedented in November, along with the optimization of measures on COVID-19 prevention and containment. "We could make the judgment that more policies for easing the market are in the pipeline until the arrival of a complete market recovery," said Wang.