HONG KONG (Reuters) – China’s deeply troubled property sector is set to see home sales fall for the second straight year in 2023, but the pace of declines will ease thanks to state support measures and the lifting of the government’s strict anti-COVID policies.
Policymakers in November rolled out the “most comprehensive” support measures to bolster liquidity in the cash-strapped real estate sector after many developers defaulted on their debt obligations and were forced to halt construction, scaring away buyers.
Below are the major support measures taken in recent months:
WHAT ARE THE LATEST MEASURES?
Dec 15-16 – The annual Central Economic Work Conference reiterated the stance that “houses are for living (in), not for speculation”, and called for satisfying “reasonable financing needs”, ensuring home deliveries, and mitigating risks for good quality and leading property developers.
Dec 2 – China ordered its top four state-owned banks to issue offshore loans secured against domestic assets by Dec. 10 to help developers repay overseas debt, Reuters reported.
Nov 28 – China’s securities regulator lifted a ban on equity refinancing for listed firms, allowing eligible listed developers to issue shares to buy property-related assets, replenish working capital or repay debts.
The regulator will also promote developer financing through the listing of qualified projects via real estate investment trusts (REITs)，and will encourage the setting up of property-focused private equity funds.
Nov 25 – China’s central bank said it would cut the amount of cash that banks must hold as reserves for the second time this year, releasing about 500 billion yuan ($73 billion) in long-term liquidity to prop up the faltering economy.
Nov 25 – Reuters reported the central bank will offer cheap loans to financial firms for buying bonds issued by property developers. It is also drafting a “white list” of good-quality and systematically important developers that would receive wider support from Beijing to improve their balance sheets.
Nov 24 – China’s biggest state-owned banks pledged at least $162 billion in fresh credit to ease a cash crunch in the property sector. Country Garden and Longfor were among the developers picked by the banks as beneficiaries.
Nov 23 – The central bank officially issued a notice outlining 16 measures to support the property industry.
Nov 21 – The central bank will provide 200 billion yuan in loans to six commercial banks for housing completions, deputy central bank governor Pan Gongsheng was quoted as saying by state-run Economic Daily.
Nov 14 – The banking regulator issued a notice allowing commercial banks to issue letters of guarantee to real estate firms for escrow pre-sale housing funds.
WHAT OTHER STEPS HAVE BEEN TAKEN?
Since the debt crisis in the sector began snowballing in the middle of last year, policymakers have rolled out policies to try to stabilise the property market.
In January, China drafted nationwide rules to make it easier for property developers to access funds from sales held in escrow accounts, Reuters reported.
In March, banks provided more than 100 billion yuan in financing support for mergers and acquisitions to private property developers considered to be of better quality, according to UBS.
In July, Reuters reported China would launch a real estate fund to raise up to 300 billion yuan to help developers resolve a crippling debt crisis.
China guaranteed new onshore bond issues by a few select private developers in August. The programme has since been expanded to include other firms, some of which have missed payments to their creditors and suppliers.
In early November, the National Association of Financial Market Institutional Investors said it would widen a programme to support about 250 billion yuan worth of debt sales by private firms, including property developers
The policies since November have focused on helping developers’ financing to prevent systemic risks, but market participants said more measures aimed at boosting homebuyer demand are needed to help foster a convincing industry turnaround.
($1 = 6.9860 Chinese yuan renminbi)
($1 = 6.8731 Chinese yuan renminbi)
(Reporting by Clare Jim and Xie Yu; Editing by Sumeet Chatterjee, Jan Harvey, Barbara Lewis and Kim Coghill)