China will take a “sound approach” to address the risk of “capital chain breaks” among developers, according to the nation’s top housing regulator, adding to a flurry of support for the beleaguered sector in recent weeks.
(Bloomberg) — China will take a “sound approach” to address the risk of “capital chain breaks” among developers, according to the nation’s top housing regulator, adding to a flurry of support for the beleaguered sector in recent weeks.
In an interview with the official Xinhua News Agency, China’s housing minister Ni Hong pledged further efforts to boost confidence in the property market, ward off risks, and steer the industry onto a “high-quality development path” in 2023.
“Forestalling and defusing risks in the sector is the bottom line, as it concerns the healthy development of the property market, as well as the steady and sustainable development of the economy,” Ni was cited by Xinhua in the report published on Friday.
The pledge comes as China is ramping up efforts to limit financial contagion among its heavily-indebted property developers. Beijing has enacted sweeping measures since November to revive the housing market that accounts for more than a fifth of the nation’s economy.
Measures have so far focused mainly on the supply side by increasing financing for developers and a gradual opening of credit markets for the strongest firms.
Still, China’s home sales continued to slump in December, with the 100 biggest developers seeing new home sales dropping 30.8% from a year earlier. Investors have been betting on further stimulus on the demand side to reverse the downturn amid Covid outbreaks.
Financial regulators announced late Thursday to extend measures that allow lower mortgage rates for first-home buyers in cities where prices of newly constructed houses drop for three consecutive months.
Meanwhile, China may impose a nationwide cap on real estate commissions to boost demand and regulate brokerage fee collection, people familiar with the matter said this week. Authorities are considering a range of 2% to 2.5% of the sale price as a guide, one of the people said.
In the interview with Xinhua, Ni said city-specific housing policies and a targeted approach should be adopted to boost market confidence, while local governments should assume main responsibility, work out project-specific plans, and implement supportive policies to reassure homebuyers involved.
The minister also said that support for first-time homebuyers will be stepped up, and vowed to lower down payment ratios and mortgage rates for the group as appropriate, according to Xinhua. Families with more than one child will also enjoy policy support, Ni added.
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