China property: with new round of stimulus on the horizon, analysts differ on extent of Beijing’s speculated rescue package
- Regulators will be more serious about rescuing the sector, CGS-CIMB Securities’ Raymond Cheng says
- From a big-picture standpoint, ‘it will be quite modest,’ according to investment firm Cambridge Associates
Beijing is expected to roll out a stimulus package for the property sector, after home prices and investment began decelerating this quarter.
Such a package is likely to include measures that will help developers improve their liquidity to restore market confidence while boosting demand, especially in China’s core cities, analysts said.
“Regulators will be more serious about rescuing the sector,” said Raymond Cheng, managing director of CGS-CIMB Securities. Lowering down payments from 30 per cent to 20 per cent, reducing mortgage rates and cancelling home purchase restrictions are among potential steps that could revive demand, he added.
Momentum in sales slowed after April, as homebuyers became wary of China’s faltering economic recovery, worsening unemployment rate and declining household incomes. Private developers have defaulted on their bonds recently due to weaker-than-expected sales and difficulties in accessing financing. Land sales in small cities also remain weak.
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Moreover, to help developers, the authorities might refine the 16 measures announced last November, he said, as many of these measures were only partially implemented and left developers with challenges when it came to obtaining financing.
