China's Latest 'Combo Punch' Housing Policies to Stabilize the Property Market
China’s Ministry of Housing and Urban-Rural Development, along with four other government departments, announced a series of policies to stabilize the struggling real estate market. Key measures include allowing local governments to relax housing purchase restrictions, lowering mortgage rates and down payment requirements, and launching a new round of subsidized rental housing and urban redevelopment projects.
On Monday, October 17, 2024, China’s Ministry of Housing and Urban-Rural Development held a press conference alongside the Ministry of Finance, Ministry of Natural Resources, People’s Bank of China, and the China Banking and Insurance Regulatory Commission. The joint press conference unveiled a package of policies, dubbed the “combo punch”, aimed at stabilizing the country’s ailing property market, which has been grappling with slowing sales, unfinished projects, and debt-ridden developers.
The new measures grant more autonomy to city governments in fine-tuning local housing policies based on market conditions. Local authorities are encouraged to phase out or cancel restrictions on home purchases, sales, and pricing, as well as the distinction between regular and non-regular housing. The central government is also urging state-owned banks to lower mortgage rates by 0.25 percentage points, cut minimum down payment ratio for first-time homebuyers to 15%, and offer discounted loan rates for affordable rental projects.
Additionally, China plans to boost subsidized rental housing supply by kicking off a new round of urban shantytown redevelopment, with a target of starting construction on 1 million units by year-end through monetary compensation to residents. The program mainly targets run-down neighborhoods with eager residents and mature redevelopment plans. The central government believes monetized resettlement allows more flexibility for residents in choosing new homes without a prolonged interim period, while also helping digest housing oversupply.
To facilitate the delivery of pre-sold homes by cash-strapped private developers, the central bank also announced a special lending program with a quota of 400 billion yuan ($56 billion) through the end of this year. All qualified projects are required to be included in the “white list” by local government-led task forces to speed up loan disbursement.
The Monday announcement came as China’s property market has deteriorated sharply over the past two years, with new home prices and sales both falling at the steepest pace in nearly a decade. Policymakers are ramping up efforts to arrest the downward spiral over fears that it could derail the overall economy, which relies heavily on housing and related sectors. However, despite an increasing number of support measures in recent months, homebuyer sentiment remains fragile amid economic uncertainty and the country’s ongoing shift toward a new development model.
Looking ahead, the housing ministry pledged to work closely with other government bodies to ensure the effectiveness of policy implementation. More detailed measures from local governments and state-owned financial institutions are expected in the coming weeks. Although analysts believe the latest moves demonstrate stronger political will to underpin the market, a sustainable recovery is still challenging without a broader economic turnaround. For China’s housing sector, regaining growth momentum may prove to be a gradual and bumpy process.