Editor's note: Zou Linhua is a researcher at National Academy of Economic Strategy, Chinese Academy of Social Sciences. The article reflects the author's opinions and not necessarily the views of CGTN.

Recently, various regions have issued a series of housing-demand support policies in response to significant changes in the supply and demand relationship in China's real estate market. Firstly, the "buying a house without a loan" policy for first-time homebuyers has been implemented comprehensively. Following implementation in four first-tier cities, namely Beijing, Shanghai, Guangzhou, and Shenzhen; cities such as Xiamen, Wuhan, Chengdu, Chongqing, Tianjin, and Changsha have also implemented the same policy. Secondly, several banks have started providing lower interest rates for first-time homebuyers' existing home loans. Thirdly, the minimum down payment ratio for first-time and second-home buyers has been lowered to 20 percent and 30 percent respectively. Fourthly, the relaxation of restrictions on home purchases, loans, sales, and prices in multiple cities, including Dalian, Nanjing, Qingdao, Jinan, Lanzhou, and Suzhou, has accelerated. It is worth noting the impact and whether these new policies can have an immediate effect.

In terms of policy focus, first-tier cities and some second-tier cities have implemented the "buying a house with a loan" policy. On one end, "buying a house without a loan" is beneficial for buyers in order to increase their leverage and it can release some housing demand, which has a certain boosting effect on market confidence. At the same time, improving the demand for housing upgrades is also a key focus of current policy support. "Buying a house without a loan" eliminates discriminatory credit policies for some people with housing upgrade demand and is necessary to bring the market back to normal. On the other end, against the backdrop of relatively high overall mortgage rates, including for first-time homebuyers, reducing mortgage rates for existing homes will alleviate market-selling pressure in the short term.

According to data from the National Bureau of Statistics, the sales of commercial housing in China decreased by 7.1 percent in the first eight months of this year. The sales revenue of commercial housing decreased by 3.2 percent, and real estate development investment decreased by 8.8 percent year on year, with a slightly expanded decline. Especially since the second quarter, the overall sales and development of the real estate market have shown a downward trend, and the market is currently in an adjustment phase. Specifically in August, the sales and investment in the property market continued to decline. In terms of new residential buildings, the sales prices in first-tier cities decreased by 0.2 percent compared to the previous month. Among them, Beijing, Guangzhou, and Shenzhen decreased by 0.2 percent, 0.3 percent, and 0.6 percent respectively, while Shanghai increased by 0.1 percent. Sales prices in second-tier cities decreased by the same level as the previous month at 0.2 percent. In terms of second-hand residential buildings, the sales prices in first-tier cities decreased by 0.2 percent: Beijing increased by 0.4 percent, while Shanghai, Guangzhou, and Shenzhen decreased by 0.3 percent, 0.6 percent, and 0.2 percent respectively. Meanwhile, prices in second-tier cities decreased by 0.5 percent. In September, Beijing, Shanghai, Chengdu, and other cities saw large sales volumes, and the listing volume of second-hand houses in Beijing, Shanghai, and other cities increased rapidly, with transaction volumes rebounding, which has sent positive signals.

The above data indicates that the timely and necessary introduction of a series of real estate regulation policies has boosted market confidence and stabilized housing prices. However, due to market expectations and the lack of coordination of the various policies, the effects of the policies have not fully manifested. The already-implemented policies also have room for further optimization. For example, purchase restrictions can be further relaxed, mortgage interest rates can be further lowered, and support for the demand for improved housing can be further increased.

Next, with further optimization of real estate regulation policies, housing demand and prices in first-tier cities will be the first to stabilize, which will drive the improvement of price expectations in second-, third-, and fourth-tier cities.