Policies in place to help sustain China's stable housing market

BEIJING - China is rolling out policies to bolster rational home-buying demand, in an effort to help the housing market sustain solid standing against the headwinds.

China's housing market continued to ease in April, with more cities reporting a decline in housing prices or registering slower growth, data released by the National Bureau of Statistics (NBS) showed.

The data showed that 39 of the 70 major Chinese cities reported a month-on-month decline, 10 more than that registered in March, although new home prices in four first-tier cities edged up 0.2 percent month-on-month in April.

A total of 31 second-tier cities witnessed a month-on-month decline of 0.1 percent in new home prices, while 35 third-tier cities saw a month-on-month decline of 0.6 percent.

China's property market started to cool in March, beset by factors including resurgences of COVID-19 outbreak, expected fall in personal income, and stranded sales activities.

In the face of the waning demand, China has actively implemented supporting measures to boost the buyer sentiment while promoting the sound development of the sector.

A case in point is the recent announcement of a reduction on mortgage loan interest rates for some home buyers, which allows commercial banks to reduce the lower limit of interest rates on home loans by 20 basis points for first-home buyers, based on the tenor of benchmark loan prime rate, according to a circular jointly released by the People's Bank of China (PBOC) and China's Banking and Insurance Regulatory Commission.

"Lowering the limit of interest rates on first-home loans is necessary and imperative to warm up and maintain stable development of property market," said Wang Qing, chief macroeconomy analyst at Golden Credit Rating International.

The differentiated policy-making also sent a clear signal that China's support for the housing market is preconditioned on the stance of "housing is for living in, not for speculation," Wang added.

Prior to the nationwide cut, many banks had already rolled out preferential mortgage loan interests on stimulating demand. Banks in more than 100 cities have axed the mortgage loan interest rates by 20 basis points to 60 basis points, said Zou Lan, an official with the PBOC.

Governments at the local level have also announced measures to add impetus to the sector. Some 120 cities nationwide have introduced various policy adjustments in the first four months of this year, according to Centaline Property, a real estate agency.

Cities including Zhengzhou and Fuzhou have unveiled incentives including lowering the down payment proportion, providing support via provident fund loans, and cutting mortgage loan interest rates to ease the property market strain.

With the increased availability of housing and streamlined procedures for mortgage approval, the consumer demand for housing will be unleashed in some cities, said Fu Linghui, an official with the NBS.

Chen Wenjing, deputy director of research at the China Index Academy, a property research institution, said the measures that have been put in place in the cities of Suzhou and Guangzhou have revived buying sentiment.

Chen expects that more local governments will craft new measures to lower the cost of rational home-buying and create favorable conditions to boost demand.