China unveiled 16 supportive measures to ensure the steady development of the real estate sector on Wednesday, a key step for the country to stabilize market expectations regarding the sector's health, experts said.
Efforts should be made to stabilize lending to real estate development and treat State-owned and private developers as the same during the process, the People's Bank of China and the China Banking and Insurance Regulatory Commission said in a joint circular released on Wednesday.
Banks who face difficulties in meeting regulatory restrictions on the concentration of loans to the real estate sector due to COVID-19 would be reasonably allowed to have a longer period to adjust their lending structure, the circular said.
The country supports developmental and policy-based banks in providing special loans aimed at ensuring housing project delivery and will facilitate additional financing affiliated with the loans, the circular said.
Reasonable extensions of loans relevant to real estate development and mortgages borrowed by individuals affected by COVID-19 will both be encouraged.
To accommodate reasonable homebuying demand, the country will support local authorities in reasonably setting the lower limits of down payments and interest rates of mortgages based on the actual situation of local property markets.
Per the document, criteria for first-time homebuyers should be reasonably determined to optimize financial services for home purchases by newcomers to cities.
Wen Bin, chief economist at China Minsheng Bank, said the 16 measures have outlined a comprehensive solution to tackle the difficulties met by real estate enterprises and relevant stakeholders.
The measures are expected to play an active role in alleviating the cash flow pressures facing enterprises and boosting homebuyers' confidence, he said, adding the key for the real estate sector to stabilize lies in the recovery of homebuying demand.
The circular also called for efforts to keep bond financing to the real estate sector stable, support mergers and acquisitions in the sector and stabilize credit expansion to construction companies.