Chinese Real Estate Policies Expected to be Further Relaxed Around “May Day” Golden Week
After many major cities in China have lifted purchase restrictions in the property market, it is reported that real estate policies are set to undergo major adjustments around the upcoming “May Day” Golden Week. It is anticipated that purchase restrictions and price restrictions will be further relaxed, leading to optimistic expectations in the real estate market.
The Political Bureau of the Communist Party of China typically analyzes and studies the economic situation at a meeting held at the end of April every year. Market rumors suggest that after this week’s Politburo meeting, real estate policies will see several adjustments.
These adjustments may include shifting focus from affordable housing construction, public infrastructure construction, and urban village renovation to destocking. State-owned enterprises or local urban investment companies may also purchase existing houses and convert them into rental housing. Furthermore, demand policies such as purchase restrictions and price restrictions may be relaxed.
Yan Yuejin, research director of the Yiju Research Institute, explained that while the three major projects will continue to advance, there are conflicts between the supply of affordable housing and the backlog of commercial housing inventory. As a result, “appropriate policy adjustments are also in line with expectations.”
Prior to this announcement, many hot cities in China had already relaxed property market purchase restrictions. Chengdu, Sichuan Province, for example, announced that housing purchase restrictions would be completely lifted starting this week.
Foreign investment institutions are also changing their attitudes towards China’s property market. UBS Greater China’s head of real estate research, Lin Zhenhong, stated that UBS is now more optimistic about China’s real estate industry for the first time in three years. He predicts a rebound in housing demand and supply with government assistance.
The news of easing policies in the property market caused Chinese real estate stocks to rise sharply on Monday, with A shares reaching the 3,100-point mark. However, even amidst this positive trend, real estate giant Vanke was downgraded by Moody’s. Moody’s lowered Vanke’s long-term corporate family rating and expressed concerns about the company’s credit metrics and liquidity buffers.
Despite some core cities still maintaining purchase restrictions, the overall sentiment in the market is positive towards the relaxation of real estate policies. Huang Tao, project general manager of Guangzhou Centaline Real Estate, believes that while further relaxation of purchase restrictions will boost market sentiment, the overall economic situation needs to improve for a sustainable rebound.
Yan Yuejin also emphasized the need for follow-up policies to drive activity in other markets through the second-hand housing market. It remains to be seen how these policy adjustments will impact the Chinese real estate market in the coming months.