China Signals Possible Support for Real Estate Industry Amid Crisis

Amid the ongoing crisis in China's real estate sector, Premier Li Qiang has indicated the possibility of increased government support for the industry. At a policy meeting, Li advocated for the refinement of property policies as a means to boost consumer demand, hinting at forthcoming assistance measures for the faltering market.

During a recent State Council meeting that Li chaired, the premier emphasized the necessity for 'systematic planning of relevant supportive policies.' The meeting's goals, as stated by the Xinhua News Agency, included spurring home-buying activity and fostering a healthy housing market environment.

It was highlighted that more high-quality housing should be built and ongoing housing projects must be completed. The council underscored the property industry's significant role in the broader economy and its impact on citizens' lives.

Analysts anticipate potential new measures focused on providing stable and tangible support to the sector. Wu Ge, chief economist at Changjiang Securities Co., suggested this after analyzing statements from the meeting.

The situation of the Chinese property market remains dire with home prices decreasing, a series of developer defaults, and increasing public discontent. The fear is that a complete collapse of the real estate sector could have devastating effects on the broader economy.

The market has not shown signs of improvement, with home sales declining for three years straight. Giants like China Evergrande Group are facing liquidation, and similar risks loom over other developers, including state-affiliated businesses such as China Vanke Co. Furthermore, property investment dropped by 9% in the year's initial months, a decline steeper than anticipated.

Chinese officials have already begun to act by urging banks to offer financial backing to developers and by giving local authorities the freedom to relax home buying regulations. Several smaller cities have eliminated purchase restrictions outright, stirring expectations that larger cities might do the same. Hangzhou, a prominent tech city in the east, has already discontinued assessments of buyers' eligibility for buying pre-owned homes.

Yet, experts argue that demand stimulation is crucial and requires more attention than just increasing the supply of housing. According to Guan Tao, a former official and now a global chief economist, the council meeting strongly indicates the property sector's importance in enhancing domestic confidence.

China, RealEstate, Policy