On March 9, 2024, in Beijing, Ni Hong, China’s Minister of Housing and Urban-Rural Development, addressed a press conference, speaking alongside officials from various key financial authorities. The Chinese housing ministry announced plans to expand its “whitelist” of real estate projects and accelerate bank lending for these unfinished developments, aiming for a total of 4 trillion yuan ($561.8 billion) by the year’s end.
A senior official from the National Financial Regulatory Administration indicated that loans amounting to 2.23 trillion yuan had already been approved for developers on the whitelist. This amount is expected to almost double to 4 trillion yuan by the end of 2024. The “whitelist” initiative, introduced in January, permits city governments to propose residential projects for expedited bank lending, with the goal of ensuring these projects reach completion and are delivered to consumers.
Xiao Yuanqi, Vice Minister of the administration, stated that the “whitelist” project now includes all commercial housing developments, thereby broadening its scope. Additionally, Xiao emphasized that banks should release funds promptly, advocating for the possibility of issuing loans in full rather than in installments.
This announcement forms part of a series of high-level policy measures intended to support the Chinese economy. Previously, in late September, Pan Gongsheng, Governor of the People’s Bank of China, declared a reduction of 50 basis points in the reserve requirement ratio (RRR) and lowered the minimum down payment for second-home loans nationwide from 25 percent to 15 percent. In a subsequent meeting chaired by President Xi Jinping, top leaders committed to halting the decline of the real estate market and fostering a stable recovery.
According to Bruce Pang, Chief Economist and Head of Research for Greater China at JLL, the recent announcements appeared to mostly fine-tune existing policies and could take time to influence sales volumes and prices, which would, in turn, affect property investment and construction. While some investors anticipated more robust stimulus measures, the reaction in financial markets was mixed, with the Chinese CSI 300 real estate index seeing a decline of over 5% after recent gains.
Over the weekend, the Ministry of Finance announced that local governments would be allowed to issue more special bonds for land purchases, and affordable housing subsidies would be extended to existing housing stock rather than limited to new constructions. Following these announcements, Chinese property stocks rose significantly, with the Hang Seng Mainland Properties Index increasing by over 2%, and real estate being the leading sector in gains on Mainland China’s CSI 300, advancing nearly 5%.
The Hong Seng Mainland Properties Index, having lost more than 80% since its 2020 peak, reflected the ongoing challenges in the sector. Ni Hong had earlier commented that developers requiring bankruptcy should proceed with restructuring. More than 50 cities have implemented measures to bolster the real estate market, with Guangzhou removing all home purchase restrictions, and Beijing, Shanghai, and Shenzhen easing homebuying restrictions for non-local buyers and lowering down-payment ratios.
Despite these efforts, previous government measures had seen limited success in reviving the market. New home prices in August experienced a significant decline, the steepest in over nine years, and the value of new homes sold fell by 23.6% year-to-date through August. The real estate sector, once a major component of China’s economy, has been in a downturn since 2021 due to a government crackdown on high debt levels, leading to numerous defaults and unfinished developments, eroding consumer confidence.
