BEIJING — China's central bank and financial regulators unveiled a package of reforms aimed at stabilizing the nation's property sector, which has faced a crisis for five years. The People's Bank of China and the National Financial Regulatory Administration issued a notice Friday permitting mortgage terms to extend to 40 years, up from 30 years, and easing financing restrictions for developers.
Developers can now raise cash by selling stocks and bonds. They will no longer be required to pay land fees in a single upfront payment, providing greater financial flexibility.
The reforms also target China's pre-sales system, where buyers pay for homes often years from completion. Under the updated regulations, developers will collect minimal upfront deposits from purchasers. Buyers gain the right to cancel contracts if construction deadlines are not met.
Local authorities must enforce uniform pre-sale standards across their jurisdictions, designed to mitigate delivery risks for homebuyers. The pre-sales model, once central to the market, has eroded public trust as numerous developers failed to complete projects, leaving millions of homes unfinished.
The property downturn originated in 2018 when regulators implemented a crackdown on excessive developer debt. The subsequent collapse of major firms, including Evergrande, exacerbated the crisis and contributed to widespread buyer wariness.
Recent economic data underscored persistent challenges across China's broader economy. Consumer spending saw a sharp slowdown last month, while housing prices continued their decline. Premier Li Qiang has demanded additional policy support during warnings that economic growth may have weakened further below official targets.
Zhang Zhiwei, chief economist at Pinpoint Asset Management, said the policies announced are "stronger than the market expected" and represent "a meaningful step in the right direction, suggesting policy makers understand the urgency to stabilize the property sector."
A-share real estate stocks experienced a broad rally during morning trading following the announcement, suggesting an initial boost in investor sentiment regarding the sector's outlook.
The effectiveness of these reforms hinges on the response from buyers and developers. If the new rules succeed in restoring public trust, the worst of China's property slump may conclude. After years of unfulfilled promises, rebuilding confidence will require more than regulatory adjustments.
