China to Unveil Measures Addressing Property Crisis and Boosting Growth

In the first four months of the year, housing prices in China have experienced a significant decline, falling by 9.8%, contrasting with a nearly 7% rise in factory output. The National Bureau of Statistics has pointed to insufficient domestic demand as a primary concern and is actively considering additional measures to reinvigorate the property sector. This comes after the market suffered from the effects of stringent regulations on property developers' borrowing practices, which have led to debt defaults and impeded growth.

In response to the cooling market, the Chinese government has taken steps to support property developers and maintain housing delivery schedules. Interest rates have been cut, and billions of dollars in financing have been made available to aid developers in fulfilling their commitments to homebuyers. Additionally, some local governments have started purchasing unsold housing units due to the low demand. These units are earmarked to be converted into affordable housing as part of trial programs that may be expanded nationally.

In a more aggressive move to address the property crisis, the People's Bank of China has abolished the nationwide minimum mortgage interest rate and adjusted the minimum down-payment ratio for homebuyers. These sweeping reforms aim to stimulate the real estate market, following data indicating the largest month-on-month home price drops in a decade. The stock market initially responded positively to these developments, with the Shanghai Stock Exchange Property Index seeing an increase before stabilizing.