SHANGHAI: China signalled more economic support measures are imminent after authorities took a small step towards supporting the ailing property market by extending loan relief for developers.
Top state-run financial newspapers ran reports yesterday flagging the likely adoption of more property supportive policies, along with measures to boost business confidence.
Earlier, financial regulators stepped up pressure on banks to ease terms for property companies by encouraging negotiations to extend outstanding loans.
The People’s Bank of China (PBoC) and the National Financial Regulatory Administration (NFRA) said in a joint statement on Monday that the aim is to ensure the delivery of homes that are under construction.
Some outstanding loans, including trust loans due by the end of 2024, will be given a one-year repayment extension, it said.
Previously, more generous loan terms were to be applied only to loans that were due by late May 2023, as part of a 16-point plan unveiled late last year.
China’s real estate crisis is stifling a recovery in the world’s second-largest economy, fuelling expectations for the government to take more steps to revive demand.
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Home sales resumed declines in June following a brief rebound this year, adding to pressure on debt-laden developers.
To revive the market, regulators have long been expected to come up with more supportive policies.
People familiar with the matter said in June that China is considering a new basket of measures, such as reducing down payments in some non-core neighbourhoods of major cities, lowering agent commissions on transactions and further relaxing restrictions for residential purchases.
The China Securities Journal, the country’s flagship securities newspaper, said yesterday that China is expected to accelerate its policy rollout in order to promote the stable and healthy development of its real estate market.
In a separate report, it also said the government may introduce measures to boost business confidence among private, state-owned and foreign firms following officials’ recent meetings with company executives.
Meanwhile, Shanghai Securities News cited Wang Qing, chief macro analyst at Golden Credit Rating, as saying that policymakers may take further measures such as relaxing property purchase and mortgage rules as well as cutting home loan rates to achieve a soft landing in the real estate market.
Besides property, other facets of the economy are also showing weakness. Consumer spending is sluggish, exports are flagging and local government debt is soaring.
Data on Monday showed the nation’s consumer inflation rate was flat in June while factory-gate prices fell further, deepening deflation concerns and adding to evidence that the recovery is weakening.
In the statement, the PBoC and NFRA said project-based special loans provided by commercial banks to developers before the end of 2024 would not be classified as higher risk.
They also urged financial institutions to ramp up support to ensure the delivery of construction projects.
“Today’s easing, which focuses on developer financing, is far from enough to stabilise the sector,” Larry Hu, head of China economics at Macquarie Group Ltd, wrote in a note to clients.
“After all, credit risk for banks would remain elevated if the housing market stays weak.”
Still, the move may signal that more property steps are coming, he added.
“Looking ahead, we expect to see more easing on the demand side, such as lowering the down-payment ratio and easing purchase restrictions,” Hu said.
Liu Shui, a researcher with China Index Academy, believes that real estate enterprises are still under great pressure to repay debts and that the authorities need to increase financing support, Shanghai Securities News reported.
Currently, developers have outstanding bonds of about 2.9 trillion yuan (RM1.87 trillion) on their balance sheet, with nearly one trillion yuan (RM650bil) of the debts due within one year and a maturity wall expected in the third quarter. — Bloomberg