Property sector keen to spur economy

By recognizing the importance of the real estate industry to the larger economy, the annual Central Economic Work Conference, which concluded on Friday, has underlined how the industry's stable development would contribute to macroeconomic stability in the coming year, officials and experts said on Tuesday.

The tone-setting conference noted the significance of achieving stable growth in real estate, unleashing housing consumption potential, preventing and defusing major economic and financial risks, as well as making a smooth transition toward a new development model.

In order to ensure stable property market development, reasonable financing demand should be met, industry mergers and acquisitions promoted, and regional or systemic risks prevented, noted the conference as Chinese leaders decided on priorities for economic work in 2023.

Efforts to stabilize the property industry have started already, especially in recent months as the nation's financial regulators launched a wide range of policies one after another, covering credit, bonds, pre-sale supervision funds, mergers and acquisitions of real estate developers among others, to ensure the property market's stable and healthy development, said Hui Jianqiang, head of research at Beijing Zhongfang-Yanxie Technology Service Ltd.

Hui said he expects further policy fine-tuning as the central authorities have reaffirmed the importance of the real estate industry.

Real estate is one of the nation's pillar industries, which accounts for about 7 percent of the nation's GDP, and takes up about 60 percent of urban household's assets. This industry has a major influence on financial stability, Xinhua News Agency reported, citing an unidentified official from the Central Committee for Financial and Economic Affairs.

"A stable and healthy property market is pivotal to our overall economic risk control and safety control, and the Chinese economic stability," said Chen Sheng, president of the China Real Estate Data Academy.

Hui said the long and extensive real estate industrial chain is also an important contributor to employment. A high-quality property industry on the path of development can ensure a large number of people related to the sector live a stable and quality life, Hui said.

"Increasing domestic demand would be vital in the economic work in 2023. We have noticed the meeting stressed support for firm demand and improved living in the context of housing consumption, because a stable property market can play an important role in achieving the economic growth targets for the coming year," said Yao Yao, head of research for JLL China.

The meeting stated that priority would be accorded to the recovery and expansion of consumption, especially in improvement to living standards, new energy vehicles and elderly care by raising people's income through multiple channels.

Chen Wenjing, director of research with the China Index Academy, expected more efforts to optimize policies to encourage rational housing demand.

"The property market experienced a profound adjustment in 2022, when homebuying sentiment and property developers' confidence needed to be boosted. To ensure the stable development of the real estate market, the first thing is to shore up market confidence in both supply and demand," Chen said.

Upholding the principle that housing is for living in and not for speculation, the conference also called for smooth transition of the real estate industry to a new development mode.

After decades of rapid development, the Chinese property market should bid farewell to high debt, high leverage and high turnover rates, and a new and sustainable development modes are needed, which will lead property developers to grow and develop in better ways, said Chen Xiao, a senior analyst with the Zhuge Real Estate Data Research Center.

Chen suggested exploring more solutions, including rental housing, government-subsidized homes and urban renewal to satisfy the demand for quality living in the whole market.

Under tightened financing, real estate securitization is one way the market can promote the liquidity of property assets. The other way of ensuring liquidity is private equity. Shifting from debt financing to equity financing could well be another financing solution for the real estate market over the mid- to long-term perspective, said Shaun Brodie, senior director and head of occupier research of China at Cushman & Wakefield.