Some Chinese cities have already rolled out concrete support policies in response to calls from the central government

These measures still fall short of tackling the structural issues that the property market faces

Multinationals directly involved in the real estate sector’s value chain are likely to experience some degree of stabilization in the short term. In other words, there’s reason to anticipate that market sentiment and business activities should cease their decline in the coming months. However, this is less of a market revitalization than many firms expected in the post-COVID reopening. Given that current measures lack the strength to catalyze a complete market turnaround, firms are unlikely to observe a rapid and significant market improvement.

Despite this, there could likely be a short-term positive impact on overall household confidence, particularly among homeowners selling their properties due to increased demand in the cities announcing such measures. The proceeds from property sales could possibly stimulate their willingness to spend, offering an opportunity for firms to increase sales. Likewise, homebuyers who manage to reduce their down payments or monthly mortgage payments will likely free up more cash. This could stimulate spending on durable goods closely related to the property market, such as home appliances, decorating materials, and furniture. Therefore, firms operating in these sectors could possibly experience a boost in their sales too.

However, the momentum generated by these measures seems likely to be short-lived and may not extend into next year. Consequently, the window for firms to expand their businesses could be quite narrow. It is thus imperative for multinationals in China to seize every opportunity presented during this period.


  • In recent weeks, China has introduced a series of policies aimed at bolstering the troubled real estate sector. These measures include reducing the down-payment thresholds and minimum mortgage interest rates for first-time homebuyers, as well as easing the requirements for someone to qualify as a first-time buyer.
  • These measures have been implemented nationwide, including in Beijing, Shanghai, Guangzhou, and Shenzhen, the four megacities that are widely regarded as indicators of the overall health of China’s property market, although down-payment ratios and mortgage rates vary from city to city. 
  • China has also taken steps to encourage lending institutions—primarily state-owned—to reduce interest rates on existing mortgages in an attempt to alleviate the burden of mortgage repayments for millions of homeowners.
  • These policies appear to have had some instant impact on the housing market, particularly those in megacities. Initial data shows that pre-owned home sales in Beijing and Shanghai doubled over the first weekend since the measures were announced.

Our View

Chinese authorities have notably accelerated their efforts to revive the strained property market. Their primary objective is to relax previous regulations that prevented many potential homebuyers from entering the market in order to increase home purchase transactions. They hope that these changes will improve market liquidity and boost overall confidence.

Early indications suggest that homebuyers, especially those in China’s four megacities, are responding positively to these initiatives. These policies represent a significant step forward and are likely to stabilize the market in the short term by preventing further dips in confidence.

Nevertheless, their impact is probably going to be somewhat limited for a few reasons. First, only 12 cities have introduced such policies to date. While this includes the four megacities, it is relatively small compared to the nationwide scope of the market. Even though more cities might implement similar measures in the coming weeks, it is unlikely that this trend will soon spread across the entire country.

Second, considering the current caution toward unstable developers and their inability to deliver on new building projects, potential homebuyers will more likely direct their interest to the second-hand home market. As a result, developers may not benefit from these measures as much as they had anticipated. Their precarious financial positions, a key issue in today’s real estate sector, are unlikely to be significantly improved by these policies alone.

Thus, the initiatives undertaken may provide a temporary boost to transactions in the second-hand home market. However, they still lack the potency necessary to revitalize the property market over the long term. Some of the sector’s most critical structural issues, such as oversupply and high leverage, are unlikely to be resolved by these measures alone.

Furthermore, as economic growth stagnates, potential homebuyers are becoming increasingly downbeat about their job security and future earning capacity. They will likely become more cautious when considering taking on significant debt in these turbulent times, unless it is absolutely necessary. This wariness is further compounded by uncertainty surrounding future trends in housing prices, which have consistently risen over the past two decades but now appear to have reached a turning point.

To reverse this downward trend, faith in the future—both on a personal level and regarding the overall economy—needs to be reinstated. However, restoring such confidence seemingly exceeds the reach of these supportive measures alone. Therefore, the fundamental issues of China’s real estate sector will persist.

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