[Asia Economy Beijing=Special Correspondent Kim Hyunjung] As the real estate market, which accounts for a quarter of China's economy, fails to escape its downturn, an official from the relevant authorities stated that interest rate cuts for actual homebuyers and policy support for the elderly and multi-child families are necessary.
On the 5th, Ni Hong, Minister of Housing and Urban-Rural Development, said in an interview with China's state-run CCTV, "Strong support is needed, such as lowering the down payment ratio or interest rates for first-time homebuyers," adding, "Reasonable support should also be provided to second-time homebuyers." He continued, "Policy support should also be given to the elderly and multi-child families," explaining, "We need to increase the supply of affordable rental housing and create a long-term rental housing market so that citizens and young people can live better lives."
This statement came in response to a CCTV reporter's question about what the key tasks of the Ministry of Housing and Urban-Rural Development are this year. He also said, "I am confident that the real estate market will stabilize and recover this year."
On the same day, the People's Bank of China, the country's central bank, announced that it will extend the interest rate cut measure for first-time homebuyers' mortgage loans, which was newly introduced in September last year. The People's Bank stated in a release that in regions where housing prices have fallen compared to the previous year and month, interest rates on loans for first-time home purchases can be further lowered to the minimum level. It added, "We will create a structure to support a stable and healthy real estate market."
Housing sales in China continue to show sluggish trends. According to the National Bureau of Statistics of China, from January to November last year, the domestic commercial housing sales area and sales amount were 1.21 billion square meters and 11.9 trillion yuan (approximately 2,168 trillion won), down 23.3% and 26.6% respectively compared to the same period the previous year. As of December last year, new home sales by the top 100 large developers plunged 30.8% year-on-year.
The authorities have also stepped up support for real estate companies. According to Bloomberg News, China Sunac (Rongchuang Zhongguo) recently received an extension on the maturity of 16 billion yuan worth of debt. Like Evergrande (Hengda), which has experienced a liquidity crisis, Sunac China avoided a default crisis by signing contracts with creditors to extend the maturities of nine regional bonds and asset-backed securities.
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