The People’s Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE) have held their working meeting for the July-December period this year, during which they have required banks to provide support for the stable and the healthy development of the real estate sector, for instance, for the precise implementation of differentiated housing credit policies based on cities, continuing to guide personal housing loan interest rates and downpayment ratios in a downward direction, better meeting citizens’ improved housing demand. Moreover, the PBOC and SAFE will direct commercial banks to adjust interest rates downwards on their stock of personal housing loans in an orderly manner, which will reduce the pressure on lenders.
Though this move is expected to support the real estate market in the second half of the year to some extent, just after the abovementioned announcement made by the PBOC on August 2 steel and raw material prices and spot prices have indicated a significant decline, as the market has reacted to the current slowdown of demand and the floods in Hebei after the recent typhoon. It is expected that the supportive measures for the real estate sector will have a gradual effect and not lead to a rebound in construction activities by the end of this year as compared to last year. In the first half of this year, the new area covered by construction activity in China decreased by 24.9 percent year on year.