A file photo of Lujiazui area in Shanghai, China. /Xinhua
Editor's note: Liu Chunsheng, a special commentator on current affairs for CGTN, is an associate professor at the Beijing-based Central University of Finance and Economics. The article reflects the author's opinions and not necessarily the views of CGTN.
In the past few days, China's major cities – Shanghai, Shenzhen and Guangzhou, as well as the nation's capital, Beijing – have introduced real-estate policies, aimed at stabilizing while stimulating the nation's real-estate market.
On the night of the last day of September, a circular was jointly announced by six Beijing municipal departments, outlining measures such as lowering the minimum down payment ratio for individual commercial mortgages and easing property purchasing restrictions.
The relaxation or removal of purchase restrictions in first-tier cities has a very clear signaling effect, which is expected to lead to a rebound in the real estate market to some extent, with a general anticipation of a "silver October" market scenario reemerging.
With these major moves, on September 24, the People's Bank of China (PBC), the nation's central bank, also rolled out a wide range of measures to boost public confidence in the nation's housing market, including but not limited to guiding commercial banks to bring down their existing mortgage rates and optimizing their relending policies.
Just days later, on September 26, the Political Bureau of the Communist Party of China (CPC) Central Committee held a meeting, making further arrangements for the country's economic work. The meeting emphasized the efforts "to stabilize the property market and reverse its downturn," urged the improvement of “land, fiscal, tax and financial policies," and encouraged the promotion of “the establishment of a new model for real estate development."
The construction site of a residential area in Jiangdong New Area of Haikou, south China's Hainan Province, September 2, 2022. /Xinhua
In recent years, China's real estate market has gone through an unprecedented adjustment period marked by falling house prices, sluggish sales and tight financing for real estate companies, severely undermining market confidence. The continuous downturn in the real estate market not only affects the development of related industrial chains but also exerts considerable pressure on economic growth and social stability.
Consequently, the government has introduced a series of supportive policies aimed at stabilizing market expectations and promoting the healthy development of the real estate market through financial and fiscal measures.
More importantly, these policies reflect the government's concern for people's livelihoods. Lowering existing housing loan interest rates and down payment ratios can reduce the economic burden on homebuyers, enhancing their willingness and ability to purchase homes. Meanwhile, optimizing affordable housing policies helps solve the housing problems of low-income groups, promoting social equity and stability.
As an important driver of China's economy, the healthy development of the real estate sector plays a crucial role in economic growth and social stability. The prosperity of the real estate market can drive the development of related industrial chains. The upstream and downstream industries of the real estate sector involve construction, building materials, household appliances, furniture and many others.
Changes in the real estate market directly affects their business landscape. When the real estate market is booming, companies in related industries can obtain more orders and profits, boosting the economy. The development of the real estate market also impacts fiscal revenue and the job market. A sluggish real estate market will, without any doubt, bring down local fiscal revenues, diminishing public investment in public services and infrastructure construction. Moreover, the fluctuations of the real estate industry are closely linked with employment in related industries.
The real estate market is also closely related to social stability. Housing issues have always been a top priority in the agenda of people's livelihoods. When housing prices are too high, or the market fluctuates too much, it will easily raise social dissatisfaction and conflicts. By introducing supportive policies to stabilize the real estate market and lower the threshold and cost of purchasing homes, the government helps alleviate social tensions and maintain social stability.
From the current intensity of policies and market reactions, these supportive policies are expected to have a positive impact on the real estate market in the short term.
However, we should also recognize that the adjustment of the real estate market is a long-term and complex process. The introduction of policies is just the first step, and their effectiveness needs to be tested by the market and verified over time.
Therefore, the government should continue to closely monitor the dynamics of the housing market, adjusting housing policies in a timely manner to ensure the stable and healthy development of the real estate market.
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