More policy tweaks likely to fix real estate

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Potential buyers look at a real estate model in Yantai, Shandong province. (TANG KE/FOR CHINA DAILY)

China could signal more policy adjustments to stabilize the real estate market, as a regulator recently noted that “signs of a bubble and the trend of financialization in China’s real estate sector have reversed significantly,” officials said. experts.

Industry experts interpret the official’s comment as an assertion by the country’s top banking and insurance regulator of continued deleveraging actions by property developers over the past two years.

In China, the financialization of the real estate sector refers to the forays of certain real estate developers into various types of financial services, in order to form themselves into diversified and tight conglomerates.

In August 2020, China unveiled the “three red lines” to limit the debt of real estate developers according to three balance sheet indicators, said Ma Hong, a senior researcher at the Zhixin Investment Research Institute.

Under the orderly arrangements made by local governments to ensure that responsibilities are met by all stakeholders, the China Banking and Insurance Regulatory Commission has guided banks to actively participate in research of housing finance solutions, extend credit to qualified property developers and take various measures to promote action for the timely delivery of pre-sold homes, the CBIRC official said on Friday.

The regulator cooperated with other government departments, including the Ministry of Housing and Urban-Rural Development, the Ministry of Finance and the People’s Bank of China, the central bank, to quickly launch measures, improve the policy toolkit and using special loans offered by political banks to support the timely delivery of pre-sold homes that are overdue and hard to deliver in an effort to protect the legitimate interests of homebuyers and maintain an overview of the social stability, said the regulator.

The China Development Bank, a political financial institution, on Thursday offered the country’s first special loan to the city of Shenyang in Liaoning province to ensure the timely delivery of pre-sold houses in the province, the official said. responsible.

The CBIRC swears by the principle “houses are for living in, not for speculation”, and focuses on the objectives of stabilizing land prices, housing prices and expectations, by continuously improving the mechanisms to long-term real estate financial management, satisfying the reasonable financing needs of the real estate market and appropriate risk management of some leading real estate developers such as China Evergrande Group, the official said.

Ma of the Zhixin Investment Research Institute said, “The official’s remarks may provide clues to the moderate improvement in funding convenience for real estate developers at the end of this year and may signal further policy adjustments to stabilize the real estate market. “.

On Friday, China Construction Bank Corp, a major state-owned commercial lender, announced plans to set up a 30 billion yuan ($4.19 billion) home rental fund. The bank itself will contribute 29.999 billion yuan to the fund, and a wholly owned subsidiary of CCB Trust Co, a subsidiary of the bank, will contribute 1 million yuan.

By investing in the existing assets of real estate companies and transforming them into rental housing, the fund aims to increase the supply of market-oriented long-term rental housing and government-subsidized rental housing, and to explore a new model real estate development. both for rental housing and for the purchase of a house. The duration of the fund is tentatively 10 years, with a possibility of continuity assessment when it expires, the CCB said.

S&P Global (China) Ratings, a wholly foreign-owned credit rating agency in the domestic market, said in a recent report: “We believe that within the general direction of ensuring the timely delivery of pre-sold homes and stabilizing people’s livelihoods, the majority of the issues related to unfinished homes and buyers’ refusal to pay the mortgages on those homes will eventually be properly addressed. in small and medium banks.


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