After falling in house sales and purchase in the first four months of this year, China released an extraordinary bundle of measures to encourage homebuyers to enter markets on Friday.  ,
The People’s Bank of China ( PBoC ) said it will establish a nationwide program to unleash 300 billion yuan ( US$ 41.5 billion ) in cheap funding to help state- owned- enterprises ( SOEs ) buy unsold homes.
The minimum down payment ratios for first-time purchases were reduced from 20 % to 15 %, and second-time purchases were reduced from 30 % to 25 %, according to the PBoC and the NFRRA.  ,  ,
Additionally, it stated that first and second home loan rates will be abolished nationwide at the lowest rate possible.  ,
According to the central bank, central bank branches is then set lower mortgage rates in accordance with local circumstances. Financial corporations should set the minimum borrowing costs based on their business climate and customer threats, it remarked.
From May 18, the PBoC may also reduce the mortgage rates of the individual accommodation retirement account, a long-term cover savings plan made up of required regular deposits by both employers and employees, by 0.25 percentage points.
Stocks of the Hong Kong-listed Chinese engineers increased on Friday after many of them more than doubled in value during the week that ended Thursday.  ,
Shares of China Vanke Co increased 19.4 % to close at HK$ 6.84 (88 US cents ) on Friday while shares of Sunac China rose 25.9 % to HK$ 1.85.  ,
Agile Group gained 24.3 % to 92 HK cents while Guangzhou R&, F Properties surged 12.7 % to HK$ 1.33.  ,
Poor house figures
Meanwhile, the National Bureau of Statistics ( NBS ) released new economic data for January- April 2024 on Friday.
In the first four weeks, China’s estate investment fell 9.8 % year- on- yr to 3.09 trillion yuan. For the 23rd subsequent month, the number has been declining.
In January-April, investment in residential real estate decreased by 10 % to 2.34 trillion yuan from last year.
New home sales fell 28.3 % to 2.81 trillion rmb for the same time. New home sales slumped 31.1 %.  ,
New home sales size decreased 20.2 % to 293 million square feet. New home sales level decreased by 23.8 % year over year.
In April, the average home price in 70 largest Chinese cities fell 3.1 % from a year ago, according to the NBS. It’s the biggest year-on-year drop since November 2014, in terms of terms of year on year.
” March and April are a classic great time, but both new house sales and sales volume have decreased year-on-year over the course of that time, demonstrating how severe the Chinese home markets are right now,” said Wang Xiaoqiang, chief scientist with the Zhuge Real Estate Data Research Center.  ,
Wang claimed that new home sales volume in the first four months of this year decreased by 26.4 % from the same time last year, when most Chinese cities still adhered to Covid laws.
Zhang Hongwei, founder of Jingjian Consulting, said property activities may improve if some urban commercial banks start offering mortgage borrowers10- 20 % discounts in the coming few months.  ,
SOE home purchases ,
He Lifeng, the vice president of China, stated at a teleconference on Friday that the government will make more efforts to address the risks associated with unfinished commercial housing projects, ensure the delivery of housing projects, and encourage the reduction of property inventory in the markets.
He claimed that local governments are permitted to purchase unsold homes at fair prices and turn them into affordable or rental housing units.
In the upcoming year, 21 national banks, including China Development Bank, policy banks, state-owned commercial banks, Postal Savings Bank of China, and joint-stock commercial banks, will be given loans worth 300 billion yuan at an interest rate of 1.75 %, according to PBoC Deputy Governor Tao Ling. The period of time can be extended four times.  ,
She stated that the central bank will provide loans to national banks to cover 60 % of the scheme’s lending, allowing them to lend SOEs an additional 200 billion yuan, increasing the total to 500 billion yuan.
She suggested that national banks should grant loans to SOEs designated by local governments in accordance with market rules, while local governments should make their own decisions about whether to join the scheme.
” The SOEs for home purchases will be designated by local governments”, Tao said. ” They must not be local government financing vehicles ( LGFVs ) or companies related to local governments ‘ shadow financing” . ,
China’s total local government debt, including LGFV loans and shadow credit, was about 90- 110 trillion yuan, or 75- 91 % of the country’s GDP in 2022, according to a research report published last November by the 21st Century China Center of the School of Global Policy and Strategy at the University of California San Diego.  ,
Read: China to reboot markets with SOE home purchases
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