China’s outstanding property loans experienced a modest 0.2% decrease at the close of the fourth quarter of 2024, according to recent data released by the central bank. This decline marks a significant improvement compared to the 1% contraction observed in the previous year, suggesting that government interventions aimed at revitalizing the real estate market are gaining traction.
Table Content:
Outstanding Property Loans and Mortgage Trends
As of the end of 2024, outstanding property loans in China totaled 52.8 trillion yuan ($7.27 trillion). A closer examination of the figures reveals distinct trends within the sector. Loans designated for real estate project development exhibited a notable year-on-year increase of 3.2%, reaching 13.56 trillion yuan. Conversely, outstanding individual mortgage loans witnessed a 1.3% decline, settling at 37.68 trillion yuan. This contraction, however, represents a slight easing compared to the 1.6% drop recorded at the end of 2023.
Government Support and Policy Measures
The Chinese property market has been grappling with a profound crisis since 2021, triggered by a government crackdown on heavily indebted developers. This intervention inadvertently diminished consumer wealth and curbed household spending, exacerbating the downturn.
In response to the crisis, policymakers have implemented a series of measures since September 2023 to stabilize the market. These initiatives encompass mortgage rate reductions and the establishment of a relending facility designed to empower local governments to acquire unsold properties. Furthermore, authorities have committed to deploying additional stimulus measures throughout the current year.
Fiscal Policy and Future Outlook
The central bank’s latest monetary policy implementation report, published on Thursday, underscored the property sector’s significance by including it among the key areas earmarked for increased credit support. While funding from the central bank plays a crucial role, analysts suggest that fiscal policy and the strategic allocation of public funds will ultimately be more impactful in driving a sustained recovery. A recent research note from Citi emphasized the importance of fiscal measures in bolstering the sector’s long-term prospects.
Conclusion: Signs of Recovery in the Chinese Property Market
The slowdown in the decline of outstanding property loans offers a glimmer of hope for China’s beleaguered real estate market. Government support measures, including mortgage rate cuts and relending facilities, appear to be gradually taking effect. While challenges persist, the recent data indicates a potential turning point, suggesting that the market may be on the path to stabilization. Continued government intervention, particularly in the realm of fiscal policy, will be crucial in determining the long-term trajectory of the Chinese property sector.
