Beijing may signal more policy tweaks to settle realty

Unfinished apartment buildings stand at a residential complex developed by Jiadengbao Real Estate in Guilin, Guangxi Zhuang Autonomous Region, China September 17, 2022. REUTERS/Eduardo Baptista

SHANGHAI: China may signal more policy adjustments to stabilise the real estate market as a regulatory official recently noted that “bubble signs and the financialisation trend in the country’s real estate sector have been substantially reversed”.

Industry experts are interpreting the official’s comment as an affirmation by the nation’s top banking and insurance regulator of continuous deleveraging actions of property developers in the past two years.

In China, financialisation in the real estate sector refers to some property developers’ forays into various kinds of financial services, in order to build themselves into diversified, tightly knit conglomerates.

In August 2020, China unveiled the “three red lines” to constrain property developers’ debt according to three balance sheet metrics, said Ma Hong, a senior research fellow at the Zhixin Investment Research Institute.

Under the arrangements, the China Banking and Insurance Regulatory Commission (CBIRC) guides banks to take an active part in finding real estate funding solutions, grant credit to qualified home developers and take various measures to promote action for timely delivery of pre-sold homes.

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 to launch measures promptly, improve the policy toolbox and use special loans in an effort to protect the legitimate interests of homebuyers and maintain the big picture of social stability, the CBIRC said.

China Development Bank offered the nation’s first special loan to the city of Shenyang in Liaoning province last Thursday, to ensure timely delivery of pre-sold homes in the province.

The CBIRC is focused on the goals of stabilising land prices, housing prices and expectations.

It is also continuously improving long-term mechanisms for real estate financial management, satisfying the reasonable financing needs of the real estate market and properly handling risks of some leading property developers. — China Daily/ANN