Informed sources said that the Chinese government is preparing a new package of measures to support the real estate sector after current policies failed to bring about a sustainable recovery for the struggling sector. Bloomberg News quoted the sources as saying that regulatory authorities are considering reducing mortgage payments for certain non-core neighborhoods in major cities, lowering broker commissions on transactions, and easing restrictions on real estate purchases in accordance withguidelines from the State Council (Cabinet).
The sources added that the government may amend, refine, and extend some existing policies in the 16-point rescue package it launched last year, noting that the new plan has not yet been finalized and may undergo some changes.
A few days ago, an economic report issued by S&P Consulting predicted that the weak recovery of the real estate market in third- and fourth-tier cities in China due to weaknesses in that market.
Impact of mortgage payments on sales
The institution said in a statement that the conditions would harm Real estate development companies that focus their activities on lower-income cities, even though conditions there are approaching those in wealthier cities. Edward Shan, an economic analyst at S&P Global Ratings, said “According to our estimates, real estate sales in first- and second-tier cities will see slight growth this year at a rate of approximately 3%,” while sales in lower-tier cities are likely to decline by approximately 10%.
He added that the shortage of new real estate supply will be the biggest factor limiting growth in higher-tier cities this year.
