China Increases Property Sector Lending to Support Market Stability
China’s housing ministry announced plans to expand a lending program for select property projects to 400 billion yuan (US$55 billion) by year-end in an effort to boost market sentiment and support project completion. The move comes as China’s property sector continues to face challenges.
On Monday, China’s Ministry of Housing and Urban-Rural Development held a press conference alongside officials from the finance ministry, central bank, and banking regulator to discuss measures to promote the stable and healthy development of the real estate market.
The housing ministry announced that special lending to property projects on the government’s “white list” will be expanded to 400 billion yuan by the end of the year, up from the previous 140 billion yuan quota. The loans will only be granted to projects that meet certain criteria and the funds must be used exclusively for project construction and delivery.
This lending program, known as the “white list”, was launched earlier this year to support the completion of stalled housing projects. To qualify, projects must meet standards such as construction schedules, presale status, and developer qualifications. The loans are disbursed through a special custodial account to ensure proper use of the funds.
Officials estimate the 400 billion yuan in lending can help ensure the construction of over 1 billion square meters of housing. This serves two key purposes - supporting upstream and downstream companies in the property sector that have been impacted by the market slowdown, and boosting confidence for existing homebuyers by demonstrating the government’s commitment to project delivery.
However, analysts caution that while the expanded lending program is a positive signal, its direct economic impact may be limited. With the property sector accounting for around a quarter of China’s economy, more comprehensive policy support may be needed to engineer a sustainable turnaround in market sentiment.
The announcement comes as China’s property market remains under pressure despite a series of support measures this year. New home prices and sales have continued to decline in most cities, while many developers are facing liquidity issues. Supporting reasonable housing demand and stabilizing market expectations have become top economic priorities for policymakers.
Looking ahead, the housing ministry vowed to work with relevant departments to fully implement the central government’s property support measures. Officials aim to strike a balance between defusing risks in the property sector and meeting the reasonable housing needs of citizens. More detailed policy guidance from local governments is expected in the coming months.
While challenges remain, the expansion of the special lending program demonstrates Beijing’s resolve to use targeted financial tools to support the property sector. However, a sustainable recovery in the housing market will likely require a multi-pronged approach that improves developer balance sheets, boosts homebuyer confidence, and increases overall economic growth and household incomes in the long run.