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China has shifted its approach to the troubled real estate sector this year, moving from efforts focused on stopping the market’s decline and restoring stability to emphasizing ongoing stabilization. The latest Government Work Report now states an aim to “focus on stabilizing the real estate market,” replacing last year’s language about “continuously exerting efforts to prevent declines and stabilize the market.” This change aligns with the guidelines set during the Central Economic Work Conference in December.
Premier Li Qing presented the key policy blueprint during the opening session of the annual National People’s Congress in Beijing today. The report also outlined major development goals through 2030.
This strategic shift indicates a move away from solely addressing existing risks and ensuring project completion towards a new phase centered on “good housing and innovative models,” according to Yan Yuejin, deputy director of a Shanghai-based research institute. For cities experiencing population growth, “good housing” should prioritize quality improvements and smart construction technology. Conversely, in areas facing population decline, efforts should aim to revive demand by enhancing living conditions and providing ecological, high-standard residential options.
Recent research from a national housing think tank shows that China still has a considerable volume of unused housing. Controlling new land supply and expediting the clearance of existing inventories are viewed as critical steps to balance supply and demand, promoting market stability.
Residential land sales across 300 major cities have continued to decrease, dropping roughly 30% in the first two months of this year compared to last year. Consequently, the focus in 2023 is likely to be on delivering fewer projects with higher quality. The trend toward “lower volume but better quality” in residential land supply is expected to persist.
Regarding inventory reduction, the government report recommends exploring various channels to revitalize existing housing stock, including potentially repurposing properties as affordable housing. The approach will involve both new developments and resale homes. The emphasis on acquiring pre-owned homes suggests local governments will play a significant role, viewing the purchase of second-hand properties alongside new builds as a key strategy to reduce housing stocks.
Funding will be crucial in supporting these efforts. Over the past two years, many regions have issued special bonds to raise capital for purchasing existing homes. For instance, provinces like Zhejiang and Sichuan have raised over CNY4.3 billion (around USD624 million) through such bonds since last year.
Authorities are also working to align housing policies with initiatives aimed at encouraging childbirth. Measures include improving housing support for newly married couples and first-time parents, as well as enhancing housing access for larger families. These efforts seek to ensure housing security for families and will involve more targeted demand-side policies this year.
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