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🇭🇰 Hong Kong /Economy & Trade

China Tightens Rules on Unfinished-Home Sales to Revive Property Sector

From Hong Kong Free Press · () English

Translated from English and summarized by DistantNews. Read the original for the full story.

At a glance

Newswire From a news agency New plan
  • Chinese regulators and ministries urged local authorities to promote ready-to-move-in homes and strengthen protections for buyers purchasing properties before construction is complete.
  • The central bank and financial regulator also raised the maximum term for personal housing loans to 40 years from 30, in an effort to ease borrowers’ debt burden.
  • Economists said the measures address the property sector’s role in China’s weak domestic demand, though the market remains under pressure after years of debt and unfinished projects.

China is tightening the rules around unfinished homes while giving buyers longer to repay mortgages, as officials try to pull the property market out of a slump that has dragged on consumption for years.

Vigorously and orderly promote the sale of ready-to-move-in commercial housing.

· Chinese officialsThe instruction formed part of a joint statement urging local authorities to support completed-home sales and protect buyers.

Local authorities were instructed on Friday to “vigorously and orderly promote the sale of ready-to-move-in commercial housing.” At the same time, officials called for stronger protections for people who buy homes before construction is complete. The instructions came in a joint statement from the National Financial Regulatory Administration and China’s housing and natural resource ministries.

The financial regulator and the central bank separately announced new lending guidelines extending the maximum term for personal housing loans to 40 years, from the existing 30-year limit. Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, called the measures “a meaningful step in the right direction.” He said longer mortgage terms could reduce the debt burden facing home buyers.

These policies are a meaningful step in the right direction.

· Zhiwei ZhangThe Pinpoint Asset Management economist assessed the new housing and lending measures.

The measures respond to the damage left by China’s property boom. After the government moved in 2020 to curb excessive borrowing and speculation, developers were left struggling with heavy debt. Half-built apartment blocks remain visible across Chinese cities, while buyers who committed their savings to new homes faced projects that were never completed.

The decision to allow mortgage loans up to 40 years helps to mitigate the home buyers’ debt burden.

· Zhiwei ZhangZhang described the expected effect of extending the maximum personal housing-loan term.

China’s leaders have also been confronting weak domestic spending since the end of the Covid-19 pandemic. Zhang said the property sector’s troubles were a major reason for that weakness, and that the new policies showed officials understood the urgency of stabilizing the market. The effort comes as exports and some high-tech industries continue to expand, but the property downturn continues to weigh on the wider economy.

The weak domestic demand is to a large extent due to the troubled property sector.

· Zhiwei ZhangZhang linked China’s sluggish consumption to the continuing property downturn.
About this summary

Originally published by Hong Kong Free Press in English. Translated, summarized, and contextualized automatically by DistantNews, with a note on how the source frames the story. Not individually reviewed before publishing. How this works.

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