On October 17, Ni Hong, Chinese minister for housing and urban-rural development, stated at a press conference held by the State Council Information Office that China will increase the size of credit for “white list” real estate projects to RMB 4 trillion ($562 billion) by the end of 2024, and try to cover all qualifying projects in the real estate industry with the white list. The increase in credit volumes from the beginning of this year appears significant, with a total of RMB 2.23 trillion approved by October 16 for “white list” real estate projects, meaning that an amount totaling RMB 1.77 trillion has to be issued in less than three months. But most of the funds will be allocated for the completion of unfinished housing projects.
According to Ni Hong, an additional 1 million units within the scope of urban village renovation and dilapidated housing will be covered through the monetization of resettlement housing. The survey shows that in China’s 35 large and medium-sized cities, there are 1.7 million units in urban villages which need to be renovated, while there is also demand for renovation in other cities, and there are 500,000 dilapidated house units that need to be renovated nationwide.
Also, a number of reductions in existing lending rates have been announced. In particular, the housing provident fund loan interest rate has been cut by 0.25 percentage points, while the downpayment ratio, unifying the minimum downpayment ratio for loans for first and second home purchases, has also been lowered - to 15 percent. In addition, a cut in the interest rates on existing loans and a reduced tax burden for "selling old and buying new" housing transactions have been announced these days.
Though the measures look impressive, in fact most market analysts are disappointed and both share prices in the property sector and steel prices have dropped today, October 17. The main thing that market sources point to as being disappointing is that the government has continued its previously announced policy and that it will have a delayed effect on property sales, with support for new construction delayed even further. “These policies are essentially aimed at solving existing problems, and, in reality, they do not provide much help for the economic growth we need now,” a representative of a Chinese mill commented to SteelOrbis. Some market analysts are worried that China may not be able to achieve its expected GDP growth of five percent for 2024.
Rebar and HRC futures prices at Shanghai Futures Exchange have dropped by 5.01 percent and 4.87 percent respectively today. “The market is disappointed to see fewer new ideas from the authorities to support real estate, so steel futures entered freefall and some raw material futures prices have fallen by the maximum limit. Local debar trades fell to a new low of around just 87,000 mt and most spot steel prices lost RMB 50-100/mt,” a Chinese trader stated.