China’s housing ministry announced that it will expand its “whitelist” of real estate projects and increase bank lending to these projects to 4 trillion yuan by the end of the year. Launched in January, the whitelist project allows city governments to recommend residential projects to banks for faster lending in order to complete unfinished housing projects. The goal is to ensure that these projects are completed and delivered to buyers. All commercial housing projects are now eligible for the whitelist project, which is expected to broaden the list.
The latest policy announcement by China’s housing ministry is part of a series of government measures aimed at boosting the economy. In late September, the People’s Bank of China announced a 50 basis-point cut to the reserve requirement ratio and lowered the minimum down payment for second-home loans nationwide. This was followed by a top-level meeting chaired by Chinese President Xi Jinping, where officials pledged to stabilize the real estate market and support a steady recovery. Despite these efforts, some investors were disappointed by the lack of new stimulus measures announced during the recent briefing.
Chinese property stocks soared after the Ministry of Finance announced measures to allow local governments to issue more special bonds for land purchases and use affordable housing subsidies for existing housing inventory. However, the volatility in the Chinese stock market is expected to continue as investors remain uncertain about the effectiveness of the stimulus package. The real estate market in China has been experiencing a slump, with more than 50 cities introducing policies to boost the market. Despite these efforts, new home prices have dropped at the fastest pace in over nine years, and the value of new homes sold has declined significantly.
Since 2020, China’s real estate sector has been experiencing a downturn due to a government crackdown on high debt levels in the sector. This has led to numerous developers defaulting on their debts and leaving many housing projects unfinished, which has eroded consumer confidence in the market. The recent announcement of the whitelist expansion and increased bank lending is seen as an attempt to revive the real estate sector and support economic growth. However, it will take time for these measures to have a significant impact on property investment and construction.
The disappointment among investors following the recent policy announcement reflects a lack of conviction in the effectiveness of the stimulus package and other measures. The Chinese stock market experienced significant volatility, with the CSI 300 real estate index dropping over 5% during the briefing. The outlook for the real estate market in China remains uncertain, as the sector continues to face challenges stemming from the ongoing economic slowdown and government regulations. The government will need to implement further measures to stabilize the real estate market and support a sustainable recovery in the sector.
