Chinese property shares took a hit after officials announced measures to boost the real estate market that were seen as insufficient by investors and economists. Concerns arose after poor economic data suggested China could miss its 5% growth target. Leader Xi Jinping initiated a stimulus package in September focused on monetary measures, but it was considered inadequate. Economists were anticipating a larger stimulus package of up to 10 trillion yuan ($1.4 trillion) to revive the economy, but Thursday’s press conference by the Housing Ministry did not meet those expectations.
The press conference revealed incremental housing support measures, leading to a 5% drop in China’s benchmark CSI300 real estate index. The Shanghai Composite index traded flat, while the Hang Seng index in Hong Kong was slightly higher. The Housing Ministry pledged to increase bank lending to designated property projects to four trillion yuan by the end of 2024. In January, China introduced a “whitelist” of construction projects to receive loans, aiming to boost completion and sales. Despite these efforts, doubts remain about the effectiveness of these measures in stabilizing the housing market.
Xiao Yuanqi, deputy director of the Financial Supervision Administration, stated that approved loans for the “whitelist” projects had already reached 2.23 trillion yuan by mid-October. The struggling property sector is seen as a core contributor to China’s economic challenges, accounting for a significant portion of economic activity and household wealth. In response to concerns about stalling growth, the central bank made cuts to lending rates and reserve requirements in September. These measures aimed to increase new lending and provide relief to the struggling real estate market, which began cooling in 2019.
With real estate prices plummeting and consumer confidence eroding, individuals and companies have been selling assets and reducing consumption and investment to protect their wealth. This damaging behavior has hindered economic growth, emphasizing the importance of stabilizing the housing market. The government’s crackdown on developer borrowing exacerbated the real estate market’s decline, leading to a crisis that has had far-reaching effects on the economy. Investors and economists are closely monitoring China’s efforts to stimulate the housing market and restore confidence in the economy.
Despite the ongoing challenges in the real estate sector, Chinese authorities remain optimistic about the market’s recovery. Housing Minister Ni Hong expressed confidence in the real estate market’s revival and emphasized the importance of implementation in driving future growth. The government’s commitment to supporting the housing sector through increased lending and project approvals reflects its dedication to stabilizing the economy. As China continues to navigate economic uncertainties and global challenges, it will be crucial to monitor the effectiveness of these measures in revitalizing the real estate market and fueling overall economic growth.
