Mainland China’s property market to survive slump by easing policies

City-specific rules will be introduced to aid the property sector’s recovery and further growth

China Global Television Network (CGTN) reported that recovery is on the horizon, as Mainland China’s eases policies in the property sector.

The real estate sector suffered after the government launched a deleveraging campaign in 2020 as a means to control borrowing among highly indebted developers. Since then, there had been efforts to ease policies to stabilise the sector.

Some of the steps they have taken include banks trimming their loan exposure to a certain level, urging banks to speed up mortgage approvals, and easing credit for developers and home buyers. Wang Tao, the chief China economist at UBS, pointed out, however, that while real estate-related credit will be friendlier this year, there will not be a large-scale stimulus.

This was repeated by Premier Li Keqiang, who said, “housing is for living in, not for speculation.” He also pointed out that the Chinese government will introduce city-specific rules to aid the property sector’s recovery and further growth. 

More: Slow and steady: Mainland China on path to becoming the largest economy in the globe

Meanwhile, China Daily reported that the annual commercial real estate investment in Mainland China is projected to exceed CNY300 billion (USD47.1 billion) in 2022.

In 2021, Mainland China’s commercial real estate investment experienced a rebound, with total transaction volume increasing by 33 percent year-on-year to CNY273 billion (USD42.9 billion). 

This year, it is expected to go up by 10 percent to 15 percent, pushing it above 300 billion yuan, according to the CBRE.

“As the country is transforming to a low-carbon economy with high value-added technology, growth in investment in biomedical, electronics and telecoms, integrated circuits, new energy vehicles, and other high-tech manufacturing industries will accelerate,” said Xie Chen, head of research with CBRE China.

Shanghai remained the most favored destination among Chinese cities, attracting more than 40 percent of total investment. Due to its limited supply of properties in key regions, Beijing has also proven to be a popular investment destination.

The establishment of real estate investment trusts in Mainland China was significant for investors, as it increased market liquidity and transparency. 

The Property Report editors wrote this article. For more information, email: [email protected].