China to explore housing pension system, improve residential quality: minister

China's housing minister has emphasized the need to improve the quality of housing and explore a housing pension system.

Ni Hong, minister of Housing and Urban-Rural Development, called on the financial institutions to participate in urban construction and renovation, promoting the creation of livable, intelligent, and resilient cities, news outlet CHINAJSB.CN reported on Tuesday.  

Ni made the remarks in a meeting with chairman of Bank of China on Monday to discuss a deepening of cooperation between the government and financial institutions, and support to high-quality development of housing and urban-rural construction.

Ni stressed the importance of building good houses for the people and providing full life-cycle security for housing. He also called on efforts to seize the opportunity of digital transformation and accelerate the construction of new urban infrastructure to make cities smarter and more intelligent.

The establishment of a housing pension system is expected to provide long-term funding metric for the housing maintenance, experts said.

The establishment of a housing pension system is aimed at better addressing the issue of funding for housing maintenance and repair, Yan Yuejin, research director at the Shanghai-based E-house China R&D Institute, told the Global Times on Tuesday.

Yan noted the housing pension system may cover housing management issues such as gas explosions, water leaks, load-bearing walls, and elevator installations where funds are needed.

He believes that the establishment of such a system may bring new growth opportunities for companies such property management companies, intermediaries, insurance companies, financial institutions, and construction enterprises.

China's real estate sector is still facing significant pressure from low sales and uneven recovery, according to May economic data.

In May, the sales price of new commercial houses in the first- and second-tier cities increased by 0.1 percent and 0.2 percent respectively month-on-month, while the sales prices of new housing in third-tier cities remained unchanged. The new house price growth slowed for all-tier cities. 

In terms of the second-hand housing, in May, the sales prices in first-tier cities decreased by 0.4 percent month-on-month from a 0.2 percent increase in April, while in second- and third-tier cities, the prices dropped by 0.3 percent and 0.2 percent respectively. 

Darius Tang, an economist with Fitch Bohua, said in a note sent to the Global Times that a gradual recovery would still be the main course for China's real estate sector in 2023.

However, the real estate sector recovery would be uneven and differentiated among cities of different tiers, he said.

China's central bank cut the one-year loan prime rate (LPR) to 3.55 percent on June 20, down from the previous reading of 3.65 percent, while the over-five-year LPR, on which many lenders base their mortgage rates, was also lowered by 10 basis points to 4.2 percent.

"This downward adjustment is the first card in a package of stimulus plans, and it also means that decisive moves to lift economic activity have begun, so the rate cut carries a symbolic significance," Yan said.