MNI China Press Digest Feb 21: Housing, Private Equity, LPR

Highlights from Chinese press reports on Tuesday:

• Yangzhou City in Jiangsu province has introduced new measures to stimulate demand in the real estate market, according to the Securities Daily Network. According to the paper, the local government will lower the mortgage rate for first time buyers, offering a 50bp discount to the loan prime rate compared to a 20bp discount previously. This will lower mortgage interest rates to 3.8% from 4.1%. Additionally, there will also be a relaxation of restrictions on residents selling their second property to buy newly built apartments, which was previously only allowed after 3 years of ownership. Citing analysts, the paper said the measures show cities like like Yangzhou are fully utilising the mortgage pricing powers given to them by the central bank to spur demand in the market.
• The China Securities Regulatory Commission (CSRC) is launching a pilot project to increase participation of private equity in the real estate sector, according to a notice on the CSRC website. Working with the Asset Management Association, fund managers who meet certain criteria will be allowed to set up new real estate private equity funds in accordance with the program conditions. Investors must have a stable equity structure, sound corporate governance, and not be in control of real estate development enterprises or their affiliates. The investment scope includes market-oriented rental housing, commercial housing and infrastructure projects.
• Authorities in China will likely lower the over-five-year loan prime rate later in H1 2023 by around 0.1 to 0.15 percentage points, according to the 21st Century Herald. Citing analysts, the paper said bringing the rate down will allow for lower housing loans, which will help the property market carry recovery momentum into the second half of the year. The decision to keep LPR rates stable in February was due to high marginal costs for banks, and authorities adopting a wait-and-see approach to developments in the property market.