Quick Bites | China considers property support

China is thinking about new property support measures to stimulate disappointing economic growth.

Regulators are mulling reducing the down payment in some neighborhoods of major cities, lowering agent commissions on transactions, and relaxing restrictions for residential purchases under the guidance of the State Council.

The government may also refine some policies laid out in the sweeping 16-point rescue package it rolled out last year, although the plans have yet to be finalised.

Signs of renewed weakness are emerging in the residential market, with a rebound in home sales slowing in May to just 6.7% from more than 29% in the previous two months.

Source: Bloomberg


Despite a broad range of policies introduced last year to support the sector, a mountain of developer debt — equal to about 12% of China’s GDP — is at risk of default and poses a threat to financial stability, according to Bloomberg Economics.

A number of developers are struggling to get creditor support for their restructuring plans after China’s real estate sector defaulted on more than 100 US dollar bonds.

Two of the country’s most high-profile developers, Dalian Wanda Group Co. and China Evergrande Group, are showing escalated signs of distress. Wanda is on an asset-selling spree to generate more liquidity while seeking a loan relief plan that may allow it to extend principal repayments for some borrowings from Chinese banks, while Evergrande faces more than a thousand lawsuits.

Australian commodity exporters will be watching developments with interest.




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