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China’s housing market gains support as Foshan, smaller cities send positive vibes to developers, buyers
- Foshan is embracing investment by property firms and looking to channel presale funding more quickly to home developers, according to statement
- Deepening slowdown this quarter will impel China to take more policy measures to support the economy, Nomura says
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China’s US$1.7 trillion housing market is getting some positive vibes from local government officials in pockets of locations, helping property developers recover from the crushing effects of policy tightening in the industry.
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Foshan in southern Guangdong province would be “open to and welcome investment by property firms” and would take steps to help lower their cost of fundraising,” according to a Friday announcement labelled as “measures for a good start of economic development in the first quarter.”
The government will try to allocate presale funds to developers in a faster way as part of its proposal to stimulate the local economy. Foshan, one of the nine mainland cities that form the Greater Bay Area, is home to some of the nation’s biggest groups including appliances maker Midea Group and condiment producer Foshan Haitian.
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“The direct support for developers in their land purchase and development is critical,” said Yan Yuejin, director of Shanghai-based E-house China Research and Development Institute. “More cities may follow Foshan with a clear, favourable tone.”
Foshan’s move marks the first explicit support for the beleaguered real estate sector in one of China’s wealthiest yet troubled regions. Many big developers in the province, including China Evergrande and Kaisa Group have teetered near collapse since the central government imposed its “three red lines” policy in August 2020 to rein in excessive leverage.
That support appears increasingly critical as the national economy lost further growth momentum last quarter, the government said, despite measures last month to inject liquidity into the system and lower corporate funding costs for the first time since April 2020. The central bank on Monday eased the medium-term lending facility in yet another move to spur the economy.
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