China has introduced a new measure to support financing in the property sector, aiming to promote healthy development and restore confidence in the real estate market. The initiative requires city-level governments to establish local property financing coordination mechanisms to provide better support for cash-strapped housing projects.
Under this measure, city authorities are generating “whitelists” of housing projects deemed suitable for financing support. These projects are being recommended to commercial banks to ease financing strains among selected developers and increase liquidity for eligible properties.
By February 20, 214 cities across 29 provinces had established these financing coordination mechanisms, proposing 5,349 residential projects to banks. As a result, loans totaling 29.43 billion yuan ($4 billion) were issued to 162 projects in 57 cities, marking a significant 64.8 percent increase compared to the end of January.
The rapid rollout of the whitelists and financing coordination mechanisms demonstrates China’s determination to inject liquidity into the property sector. The focus on residential projects ensures that funding meets reasonable financing needs, supports construction and completion of homes, and paves the way for a virtuous cycle between the finance and property sectors.
Moving forward, city governments are expected to balance efficiency and risk control. Authorities are ensuring that loans granted are used exclusively for the development and completion of pledged projects, preventing funds from being diverted to land purchases, debt repayment, or other investments. Effective implementation of this mechanism is anticipated to further promote stable growth and sustainable development in the property sector.
As China shifts toward a more consumption-led economic model, the real estate industry continues to face challenges related to sentiment and liquidity. Addressing both cyclical and structural adjustment pressures requires authorities to provide effective policy support from demand to supply, sales to investment. These efforts are expected to accelerate the path toward a more sustainable property sector in China.
In recent months, a series of support measures aimed at reviving the property sector have been announced. On the residential side, China cut the five-year loan prime rate by a record 25 basis points, signaling a strong commitment to supporting the housing market.
For the commercial real estate sector, new measures have been released to broaden commercial property loan uses and ease liquidity. By the end of 2024, banks can provide commercial property loans to qualified developers to repay debts not directly related to the commercial assets used as collateral. This move is considered a significant step toward increasing financial support for quality developers and reviving market confidence.
Reference(s):
China's property financing support to promote healthy development
cgtn.com
