Specific policies: Workers on a suspension platform prepare to install tiles for a building under construction in Beijing. As China’s urbanisation continues its march forward, analysts point to significant growth potential and a need for structured housing solutions. — AP
BEIJING: As China’s real estate sector tries to gain a solid footing, experts are calling for swifter and stronger steps to restore sentiment and stability.
Among these were easing purchase restrictions in major cities, exercising deeper cuts on mortgage rates and expanding government-led acquisitions of unsold housing for conversion into affordable homes.
Their comments followed a tone-setting meeting, where policymakers decided priorities for China’s economic work in 2026, placing high premiums on stabilising the real estate market.
The annual Central Economic Work Conference, held in Beijing last week, called for city-specific policies to control new housing supply and clear inventory, and encouraged the acquisition of existing residential properties to use them as government-subsidised housing.
“A persistent property market downturn does more than impact developers and local government revenue, it directly affects the economic decisions of millions of households,” said Robin Xing, chief China economist at Morgan Stanley.
Xing said residential property has constituted a significant portion of family wealth in China. When housing prices decline, homeowners feel less wealthy.
This perception erodes financial confidence, leading to increased precautionary savings and a marked reluctance to spend.
Policymakers set an explicit target for “a notable increase in household consumption as a share of gross domestic product” in the recommendations for China’s next five-year blueprint.
It dictated that more forceful policies need to be urgently unveiled to halt the downward trend in the property market and mitigate its negative wealth effect on household consumption.
Wang Qing, chief macroeconomic analyst at Golden Credit Rating International, said that a further relaxation of home purchase restrictions in the core districts of Beijing and Shanghai, as well as Shenzhen in Guangdong province, could be put in place.
“This could serve as a powerful signal, demonstrating the government’s commitment to stabilising the property sector and bolstering overall market confidence,” Wang said.
The three cities have eased some home purchase restrictions this year, lifting curbs in suburban areas, allowing more homes for families and removing limits for non-locals in outer districts, though core areas still retain some purchase restrictions.
Wang noted that the property markets in these metropolitan hubs function as critical barometers for the entire country.
Their stabilisation is expected to create a positive ripple effect, helping to anchor expectations and guide sentiment in smaller cities currently facing greater market pressures.
“More importantly, measures such as targeted cuts to existing mortgage rates and fiscal interest subsidies should be implemented to lower the burden of home loans for residents,” Wang said.
“This is a key move to activate market demand and turn around property market expectations at the current stage.”
Wang also noted the potential of “substantial tax and fee reductions in property transaction processes” as another lever to stimulate market activity. — China Daily/ANN
