Consensus is fast emerging among industry observers that China's property market, which had faced a variety of troubles over the last few years, is back on track, with recovery appearing possible
this year.
"After a period of market correction, the property market will stage a strong comeback this year on the back of a number of supportive measures," said Chen Wenjing, director of research at the China Index Academy.
Since last November, a series of measures targeting both supply and demand have been introduced. The work conference of national housing and urban-rural development held on Jan 17 also set the tone for this year's property market policies, which is boosting confidence, controlling risks and promoting transformation, Chen said.
Meantime, the nation's financial regulators have released a number of supportive measures, including differentiated credit support for homebuyers, facilitation of delivery of residential projects, enhanced cash flow of prime developers, guidance for their balance sheets toward a safe range, and improvements to the rental housing market.
All of which echoed the tone-setting annual Central Economic Work Conference in mid-December, experts said.
"We think the Chinese government will continue to implement measures to stabilize the property market, improve expectations, ensure the delivery of residential buildings, revive the housing market, support homebuyers' inelastic demand for housing, back the rising demand for upgraded housing, and meet the reasonable financing needs of property developers," said Pang Ming, chief economist with JLL China, a global real estate service and investment management firm.
Pang said he believed policies will be eased further until the physical market shows signs of stabilization and recovery. Industry leaders with solid fundamentals and developers are expected to sail through the tough times.
Mortgage interest rate cuts have been seen in a number of cities. At least 30 Chinese cities, including second-tier cities like Tianjin, Zhengzhou of Henan province, Fuzhou and Xiamen of Fujian province, Changchun of Jilin province and Shenyang of Liaoning province, had lowered their interest rates for mortgages as at the end of January, according to data compiled by the Zhuge Real Estate Data Research Center.
The adjustments are a response to a joint statement made by the People's Bank of China, the country's central bank, and the China Banking and Insurance Regulatory Commission in early January. The regulators had allowed cities whose new home prices dropped both month-on-month and year-on-year for three months to decide if they would like to retain, reduce or remove local lower limits for interest rates on first-home loans in a phased manner.
Sun Duo, a 30-year-old employee of a State-owned enterprise, is one of the earliest beneficiaries of mortgage rate cuts in Zhengzhou. The capital city of Henan province in Central China said first-time homebuyers such as Sun can have their mortgage rates as low as 3.8 percent starting Jan 29, along with a down payment of 20 percent of the home price.
So, Sun and his wife took a home loan of 1.4 million yuan ($201,869) to buy a 125-square-meter apartment. Prior to the rate cut, they might have ended up paying 6,765 yuan per month as the old rate was 4.1 percent. That could have meant the family would have funneled about 40 percent of their monthly income into debt repayments. But, under the new policy, their monthly payment is down by 242 yuan, potentially saving up to 100,000 yuan over the loan tenure.
"Zhengzhou's new home and pre-owned housing price index dropped 17 months in a row, and it's necessary to boost the weak market confidence. A stable property market matters to the whole province's real estate market and fixed-asset investment, said Li Yujia, chief researcher at the Guangdong Planning Institute's residential policy research center.
