Realty foresees glad tidings next year

Real estate experts anticipate 2024 to be a pivotal year with fresh measures expected to resolve industry risks, reshape realty development framework and facilitate stable economic development.

After digesting the highlights of the annual Central Economic Work Conference, experts predicted ongoing financial measures will support real estate companies. They also anticipate easing of requirements for home purchases and cuts to home loan rates in the coming year.

The tone-setting conference stressed that proactive and prudent efforts should be made to defuse risks in the property industry, the reasonable financing needs of real estate enterprises of different ownerships should be met equally, and the building of a new development model for the industry should be accelerated.

Dong Jianguo, vice-minister of housing and urban-rural development, said at an economic seminar in Beijing on Wednesday that his ministry will continue cooperating with financial regulators to ensure effective implementation of various real estate policies. He also stressed an impartial approach, catering to the reasonable financing needs of developers with different ownership structures.

The ministry's measures aim to assist real estate firms experiencing temporary financial stress in resolving short-term cash flow issues, facilitating their return to normal operations, and firmly preventing the concentrated outbreak of debt default risks.

In cases where realty firms' illegal activities lead to insolvency and loss of operational capability, the ministry will follow legal and market-oriented principles in dealing with such enterprises, Dong said.

Investment bank China International Capital Corp Ltd said the conference's emphasis on preempting systemic risks is crucial for stabilizing cash flows and alleviating credit risks for real estate enterprises amid weak new home sales.

Wang Qing, chief macroeconomy analyst at Golden Credit Rating, said China may amplify support for real estate in 2024, adding there is substantial room for relaxing home purchase requirements further and lowering home loan rates again, in addition to continued support in the form of loans, bonds and equity financing.

Wang said home loan rate cuts will likely continue next year. "Around mid-2024, the real estate market is expected to witness a rebound, marking the end of a roughly three-year downcycle."

Chen Wenjing, director of market research at the China Index Academy, predicted that first-tier cities will continue optimizing home purchase restriction policies, more second-tier cities will lift such restrictions in 2024, and some cities may use measures like housing subsidies to stimulate demand.

Dong recalled that financial regulators had already introduced a series of supportive policies. The risk resolution process, however, still requires time.

In response to concerns over a possible drop in housing demand, Dong said overall demand remains stable, yet there was a shift in the housing transaction structure with pre-owned home transactions replacing some new home sales.