Quarterly Meeting Details Released on the 24th: "Measures to Promote a Healthy Real Estate Market"
[Asia Economy Reporter Park Byung-hee] The People's Bank of China, the central bank of China, has announced its stance to implement measures for the healthy development of the real estate market and to protect the interests of Evergrande Group homebuyers.
According to Bloomberg News on the 27th (local time), the People's Bank of China held a quarterly meeting on the 24th and disclosed the position summarized at that meeting through a statement released on the 27th. Amid growing concerns about the real estate market due to the liquidity crisis of Evergrande Group, China's second-largest real estate developer, the People's Bank of China expressed its intention to take measures to ensure the sound development of the real estate market.
Evergrande Group is currently experiencing a severe liquidity crisis to the extent that it cannot even pay bond interest. While Evergrande's excessive debt management, with liabilities exceeding $300 billion, is problematic, there are also claims that the Chinese government's real estate regulations contributed to Evergrande's liquidity crisis.
In fact, China's sales in August showed the worst slump since February last year. August housing sales fell 18.3% year-on-year, marking the worst decline since a 34.7% plunge in February last year. China's housing sales growth rate has been declining continuously after recording 143.5% in February this year due to the base effect.
Since housing sales turned to a downward trend from July, concerns have been growing that tightened regulations might be pushing the real estate market into a slump. In this situation, the People's Bank of China expressed its commitment to stabilizing the real estate market, aiming to soothe investors' anxieties.
GF Securities analyst Jong Linan commented on the People's Bank of China's statement, saying, "Even if there is no systemic easing of regulations across the entire real estate market, there will likely be fine-tuning of regulatory policies." He added that it is rare for the People's Bank of China to mention the real estate market in a quarterly meeting, which shows how much the bank is concerned about the risk of credit tightening in the real estate market.
Huatai Securities also expects that if housing prices begin to fall, the authorities will fine-tune regulatory policies, and measures such as easing mortgage loan ratios could be a possibility.
The People's Bank of China emphasized the importance of balancing economic stimulus measures and regulations to prevent market risks, stating that coordination with industrial and fiscal policies will be strengthened to maintain this balance. The bank also promised to lower the real lending interest rates. Furthermore, it assessed that China's economic recovery is still neither solid nor balanced.
Bloomberg analyzed that compared to the statement from the second-quarter meeting released in August, the economic outlook remains similar without much change, but the tone has become somewhat more cautious.
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