The authorities will make sure to deliver funds only to the most virtuous promoters, in an attempt to restore confidence in a sector that is going through a historical crisis.
by Simon Leplâtre (shanghai, correspondence)
Faced with the continuous fall in real estate sales for a year and a half, the Chinese authorities have decided to change the gear: mid-November, the Banque Populaire de China (the Central Bank) published a sixteen points plan calling for Facilitate the financing of healthy promoters. Ten days later, the main Chinese banks promised to lend at least 1,280 billion yuan (174 billion euros) to Chinese promoters. Objective: give air to a sector responsible for about a quarter of Chinese growth.
Since the start of this crisis, the central bank has several times fell its key rates to increase available liquidity. Local governments facilitate the purchase of residences, main or secondary, by playing on the initial contribution rate required or the opening of the city non-residents. Without much success so far: sales continue to fall every month: out of the first eleven months of the year, transactions from the main Chinese promoters fell 42.6 % compared to 2021, according to China Real Estate Information Corp. Investments in the sector fell 8.8 % over the first ten months of the year.
This time, the authorities want to cancel the negative effects of a reform adopted in mid-2020, prohibiting banks from lending the most indebted promoters. The new measures will unlock significant funds for good students, hoping that it is enough to support the sector. The bad students on the contrary, such as Evergrande and Sunac, who have been lacking on several debt deadlines for a year, will not have access to these funds. Part of these sums should also allow the takeover of abandoned projects by over -indebted companies. Clearly, it is not a question of forgetting the commitments made in mid-2020 to clean a dopy sector for debt, but rather of negotiating a “smooth landing”, according to the governor of the central bank, Yi Gang.
a disturbing property tax
The players in the sector hope that this influx of liquidity will finally allow a recovery: “I think that we should soon touch the bottom: on sales volumes and prices, we are still down, but the decline slows down. We hope to see an improvement in things by the second half of 2023. However, there is a strong divergence between the attractive metropolises, where prices are already going up, and the smallest cities where demand is very low, “notes Xie Yifeng, president of the Institute for Research on Urban Real Estate in China.
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