China is taking significant steps to bolster its property sector amidst ongoing challenges. In January, the government introduced a new financing support measure aimed at promoting the healthy development of the housing market.
Under this initiative, city-level governments are required to establish local-specific property financing coordination mechanisms. These mechanisms involve creating 'whitelists' of eligible residential projects, which are then recommended to commercial banks for financing support. This strategy is designed to alleviate financing strains for selected developers and increase liquidity for viable property projects.
As of February 20, 214 cities across 29 provinces have implemented these coordination mechanisms, proposing 5,349 residential projects to banks. Consequently, 29.43 billion yuan ($4 billion) in loans have been disbursed to 162 projects in 57 cities, marking a 64.8% increase from the end of January. This rapid rollout underscores China's commitment to injecting liquidity into the property sector and restoring market confidence.
The focus of the whitelist is on residential projects in need of funding support rather than on developers themselves. This targeted approach aims to ensure the construction and completion of homes, fostering a virtuous cycle between the finance and property sectors. By doing so, the mechanism supports healthy and qualified housing projects facing short-term challenges, thereby stabilizing the market.
Moving forward, city governments are expected to balance efficiency with risk control, ensuring that loans are used exclusively for project development and completion. The authorities are vigilant in preventing funds from being diverted to land purchases, debt repayment, or other investment activities. Effective implementation of these measures is crucial for the sustainable growth of China's property sector.
In addition to the whitelist initiative, China has introduced other support measures, including a significant 25 basis point cut to the 5-year loan prime rate, signaling continued commitment to easing and supporting the housing market. For the commercial real estate sector, new measures have broadened loan uses, allowing banks to provide loans to qualified developers for debt repayment unrelated to commercial assets. These steps are aimed at increasing financial support for compliant developers and reviving market confidence.
Reference(s):
China's property financing support to promote healthy development
cgtn.com
