China Policymakers Unveiled Incremental Stimulus to Support Property Market

On 17 October, 5 China Central Government Departments hosted a press conference and unveiled additional policy stimulus to stabilize the property sector. The conference introduced incremental measures, including the launch of cash-settled urban village redevelopment projects and the expansion of the ‘whitelist’ housing projects to Rmb4trn, aimed at stabilizing the property market. However, we note that few details related to the funding and implementation for the housing inventory purchase program were discussed, which should be the key for rebalancing the property sector. We believe announcements at the conference are generally in line with market expectations, with slight downside from lack of details on housing inventory purchase plans. Key updates are summarized below:

• The Ministry of Housing and Urban-Rural Development (MOHURD) announced 1) the launch of cash-backed settlement for 1mn unit of urban village redevelopment and dilapidated housing renovation, with potential for further scaling up; 2) inclusion of all qualified housing to ‘Whitelist’ project for bank lending, and expand the scale to Rmb4trn by end-2024 (currently Rmb2.2trn). MOHURD officials believe that China property market has stabilized after three years of adjustments, and have confidence in the upcoming October property sales data.
• The National Financial Regulatory Administration (NFRA) pledged for more diversified sources of property financing, and allowed policy banks and commercial banks’ lending for land acquisition.
• MoF explained that local government has the autonomy for the use of local government special debt for housing inventory and land acquisition. Property tax related policies are under progress.
• PBOC indicated that the majority of existing mortgage rate cut will be done by 25 October. PBOC is studying to allow policy banks and commercial banks’ lending to qualified corporates for land acquisition, and PBOC will provide necessary funding support, though no detailed numbers were disclosed.
• The Ministry of Natural Resources reiterated that leveraging existing idle land and suppressing new supply remain the current focus. The funding for existing land acquisition is under research by relevant departments.

Implications

We believe policies announced by regulators so far have been rather comprehensive as they tackle key concerns across inventory (land and housing inventory purchase by local government; housing supply control), demand (mortgage rate cut; relaxation of home purchase restrictions), as well as developer financing (project ‘Whitelist’). Property transaction volume in primary market have already shown signs of improvement since late September, on the back of stimulus policies by central government and the relaxation of home purchase restrictions in top-tier cities. The next key catalyst to support market sentiment is the announcements of funding scale and implementation details. For housing inventory purchase, the biggest hurdle is the negative carry for local government and SOEs (funding cost of 2.9% from bank loans vs. rental yield of ~2%), and further funding supports from central government will be necessary to address this issue

Summary of Upcoming Key Macro Events

Date	Event
Coming Weeks	Ad hoc press conferences by other ministries
18 Oct 2024	Q3 GDP release
18-20 Oct 2024	Financial Street Forum (with PBOC, NFRA, CSRC and SAFE sessions)
Oct 2024	Politburo meeting (possibly on economic policies)
Late Oct – early Nov 2024	The NPC Standing Committee meeting
5 Nov 2024	US presidential election
Early to mid-Dec 2024	Politburo meeting on economic policies
Mid to late Dec 2024	Central Economic Work Conference
Mid-Jan 2024	Q4 and full-year 2024 GDP release
20 Jan 2025	US presidential inauguration
Jan-Feb 2025	2025 provincial-level “Two Sessions”
Early-to-mid Mar 2025	2025 “Two Sessions”

Source: Government websites, Goldman Sachs Global Investment Research, Mirae Asset, 13 Oct 2024.