The People’s Bank of China (PBOC) and the China Banking and Insurance Regulatory Commission (CBIRC) have jointly issued a directive outlining 16 measures for stabilising the country’s beleaguered housing market.
PBOC and CBIRC recently jointly issued the “Notice on Properly Performing Work for Current Financial Support for the Stable and Healthy Development of the Real Estate Market” (关于做好当前金融支持房地产市场平稳健康发展工作的通知), triggering widespread discussion in Chinese financial circles.
Domestic observers said that the contents of the notice are extensive and detailed, and will have a positive and major impact upon the Chinese housing market.
“They embody the attitude of regulators towards real estate finance, to avoid disappointing or an acceleration in deleveraging leading to the onset of systemic risk, and at the same time hoping to change to a new form of real estate financing directed at new urban residents and rental homes,” said one observer to National Business Daily.
The Notice contains 16 measures divided into six key areas, which include maintaining stable and orderly real estate financing, effectively performing financial services to “guarantee home delivery” (保交楼), actively cooperating in effective performing risk disposal for beleaguered real estate enterprises, and lawfully protecting the legal rights and interests of residential housing consumers.
The sixteen measures include:
- Stabilising the provision of real estate development loans.
- Supporting rational demand for personal housing loans.
- Stabilising the provision of loans to building companies.
- Supporting rational extensions on outstanding debt for development loans and trust loans.
- Maintaining the fundamental stability of bond financing.
- Maintaining the stability of asset management product financing including trusts.
- Supporting development and policy banks in providing special loans to “guarantee home delivery.”
- Encouraging financial institutions to provide accompanying financial support.
- Effectively performing financial support for the takeover of real estate projects.
- Actively exploring marketisation support measures.
- Encouraging the lawful and independent negotiation for the deferral of payments of principal and interest.
- Pragmatically protecting the personal credit scoring rights of individuals who defer loan payments.
- Extending concentrated management policy transition period arrangements for real estate loans.
- Stage-based optimisation of real estate project takeover financing policies.
- Optimisation of rental home financial services.
- Expansion of diversified financing channels for the rental home and home leasing market.
The Notice also requires that state-owned and privately operated real estate enterprises receive equal treatment from financial institutions and regulators.
Yan Yuejin (严跃进) from the Yiju Research Academy said that the Notice was a “systemic summary” of the latest round of real estate finance work, and provided “the most clear and comprehensive roadmap for the real estate financing system following the 20th National Chinese Communist Party (CCP) Congress.”
Li Yujia (李宇嘉), chief researcher with the Guangdong Province Residential Housing Policy Research Centre, said that loss of market confidence necessitate government intervention.
“At present, there is a risk of a decline in real estate volumes and prices, and pessimistic expectations forming a negative feedback loop, leading to further loss of confidence in the real estate market,” Li said.
“All parties are avoiding risk, and financial leveraging has shifted to financial deleveraging, leading to a liquidity trap in the sector.
“Looking at recent financial dating, financial institutions have markedly contracted their exposure to real estate. This means that even though regulators have released a large volume of loosening policies to support rational financing and takeovers by enterprises and guarantee housing delivery, as well as stimulate consumer finance by households, the results of these policies have not been pronounced.”