Financial moves can help ease realty woes

Further optimization of financial policies should be introduced into the real estate sector to better meet people's rational demand for home consumption, promote the stable and healthy development of the property market, and maintain financial and economic stability, said experts.

More than 60 Chinese cities have launched financial adjustments in their property sectors since the beginning of the year, including raising personal housing loan amounts, lowering down payment proportions and cutting home loan interest rates, wrote Dong Ximiao, chief researcher of Merchants Union Consumer Finance Co Ltd, in an opinion published on Economic Daily.

"Next, more optimization should be introduced to real estate financial policies to facilitate the reasonable living consumption requirements of people, and to promote the property market's stable and healthy development," Dong said.

Fine-tuning has been made by financial regulators regarding the stringent property sector financial policies since last October, and these measures have gradually helped meet developers' rational financial needs and homebuyers' reasonable home consumption requirements, Dong added.

More than 70 cities have already relaxed home purchase restrictions or lowered mortgage rates in the current downcycle, including some provincial capitals, according to Robin Xing, chief China economist at Morgan Stanley, who believes more demand-side easing is needed to anchor expectations.

"Property sales remained weak year-to-date, as reflected in the 43 percent year-on-year decline in March median contracted sales among the top 100 developers. Coupled with COVID-19 headwinds, which could weigh on employment and income, further easing measures in the sector are needed to anchor expectations," Xing said.

The updated measures will be launched out of consideration for matters such as more stable growth, better risk control, as well as enhanced development, Dong said.

It is both necessary and important to take property-related financial policies as important measures in regulating the real estate sector. By sticking to the principle of "housing is for living in, not speculation", speculation should be gradually reversed.

Implementing financial policy adjustments for the sector in a step-by-step fashion will allow for a minimal impact from the policies, Dong added.

Wang Tao, head of Asia economics and chief China economist at UBS Investment Bank, expects additional monetary easing with an interest-rate cut of 10 basis points in the coming one to two months, as well as credit growth strengthening in the next few months.

"The latter will likely be achieved by RRR cuts, other liquidity facilities and further easing of credit policy, including to the property sector," Wang said.

Property policy will likely be further eased, including relaxing purchasing restrictions at local levels, mortgage rate reductions, lowering of down payment requirements, accelerated public rental housing construction and appropriate help with property developers' financing difficulties, Wang said, adding that these policies can help bring about a rebound in economic activity in the second quarter.

Xing also expects more cities to relax their grip on the property market, while at the national level, more concrete measures could be announced to support home purchases by urban residents without a hukou－family registration certificates in the residence cities－or those who recently received one.