Deutsche Bank-Asia Macro Strategy Notes RMB A stock check on the propert...

14June2024DeutscheBankResearchAsiaChinaForeignExchangeAsiaMacroStrategyNotesDateRMB:AstockcheckonthepropertysectorOn17May,theChinesegovernmentannouncedasetofcredit-easingmeasuresforitsbeleagueredpropertysector.Themeasures,whichincludeslashingtheminimumdownpaymentratioandscrappingtheflooronmortgagerates,arearesponsetotheworseningsituationinthesector,includingpersistentdeclineinpropertypricesinboththeprimaryandsecondarymarkets,aswellasthemostseveredownturnseensincereformsallowedforthedevelopmentoftheprivatehousingmarket(knownascommodityhousing)inthelate1990s.AmongthemeasuresannouncedincludedaRMB300bnrelendingfacilityfromthePBoCtosupportthepurchaseofunsoldandfinishedhomestobeusedaspublichousing.ThepropertysectorhasalwaysplayedapivotalroleinsupportingChinesegrowth.Atitspeakin2020-21,thehousingsectorcontributed~25%toGDPgrowth,~40%oflocalgovernmentrevenue,andcomprised60-70%ofhouseholdassets.Hence,astrongpropertysectorgenerallysupportsgrowth,allowslocalgovernmentstospend,andencourageshouseholdstoconsume.Localgovernmentsdoingtheirfairshare.Inadditiontothemeasuresannouncedbythecentralgovernment,localgovernmentstoohaveintroducedvariouspoliciestosupportthesector.Forexample,inlateMay,Shanghai,ShenzhenandGuangzhouannouncedaseriesofeasingmeasurestostabilizethepropertymarket.InShanghai,theauthoritiescuttheminimumdownpayment...