The People’s Bank of China signaled more targeted support may be on the cards for the property market as it sought to assure investors that the risks banks face from the sector are controllable.
(Bloomberg) — The People’s Bank of China signaled more targeted support may be on the cards for the property market as it sought to assure investors that the risks banks face from the sector are controllable.
Real estate policies will be “tailored” to cities, Zou Lan, head of the monetary policy department, said Friday at the PBOC’s briefing on first-half economic statistics. He added that the policies that were rolled out when the market was overheated can be “optimized marginally.”
“Supply and demand in China’s home market has shown profound changes,” Zou said, adding that the central bank will further support home-buying demand on first homes and upgrades.
Concerns about developer defaults have been growing in China. But Zou said non-performing loans to developers make up just a small proportion of overall loans, and mortgages that are at risk are also low relative to total lending.
The real estate market stabilized this year, even though risks associated with some developers still need time to be “gradually digested,” he said. Nearly 70% of developers’ debt is in the form of pre-sale funds paid by home buyers or payment overdue for suppliers.
Only 31% of the sector’s debt is owed to financial firms, and less than half of that is bank loans.
Authorities this week signaled more economic support for the housing market is imminent after it extended loan relief to developers. Many investors see a meaningful turnaround in the property sector crucial to China’s recovery. A Bloomberg Intelligence gauge of developer shares has lost over 26% this year amid persistent sluggishness.
The central bank will meet reasonable financing needs of the property sector, while a “favorable financial environment” of an “orderly clearing of the sector’s risks” will be maintained, Zou said.
Those remarks seemed to imply policy support will focus on industry leaders only — a long-standing stance that authorities have held.
For more on China PBOC Briefing on First-Half Financial Statistics, click here for our TOPLive blog.
–With assistance from James Mayger.
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