China’s Policy Meeting on Property Raises Hope of Aid for Sector

China’s Premier Li Qiang called for further optimization of property policies to stimulate demand, in a sign that more support may be on the way for the troubled sector.

“Systematic planning of relevant supportive policies” is needed to drive potential home-buying demand and promote healthy development of the housing market, a meeting of China’s State Council chaired by Li said on Friday, according to a readout from the official Xinhua News Agency.

China needs to build more high-quality housing and continues to ensure home projects are completed, the readout said, adding that the property industry concerns the overall economy and people’s practical interests.

“There may be more property sector measures that offer real solid support” based on indications from the meeting, Wu Ge, chief economist at Changjiang Securities Co., said during a webinar held by the think tank China Macroeconomy Forum on Saturday.

China’s property sector so far has shown little hint of a turnaround. Home sales are in a third year of decline and show no signs of improvement. Once-mighty China Evergrande Group has received a liquidation order and Country Garden Holdings Co. is at risk of one. Cash-flow troubles are emerging among more developers — including state-backed ones such as China Vanke Co. Property investment slumped 9% in the first two months of the year, more than expected.

Chinese authorities have been stepping up support for the housing market by urging banks to provide financing for developers and allowing local governments to ease rules for homebuyers. Some smaller Chinese cities have completely scrapped home purchase restrictions, raising expectations for large cities to follow suit. The eastern Chinese tech hub of Hangzhou, for example, no longer reviews buyers’ eligibility when they purchase pre-owned homes.

More measures are needed to stimulate demand rather than increasing housing supply, Guan Tao, global chief economist at BOC International and a former official at China’s foreign exchange regulator, said at the CMF webinar. The meeting does underscore that the property sector is key to boosting domestic confidence, he said.