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Peggy Ye

China’s new housing finance rules reduce the risk of buying a new home but analysts are not convinced they will be enough to tempt hesitant buyers still weighed down by falling prices and weak confidence.
The changes are designed to reduce the risk in buying pre-sold homes. Mortgage funds for pre-sold homes will be released only after submission of the project completion filing, when the homes are certified as safe and ready to move in, rather than when the main structure is finished. The maximum mortgage term has also been extended to 40 years from 30.
The measures address a problem that emerged during China’s property downturn, when some buyers were left paying mortgages on homes that developers struggled to complete.
But analysts said concerns about handover were only one factor behind the decline in home purchases.
“I don’t think the primary goal of this reform is really to … stimulate property demand,” said Karl Choi, head of China property research at Bank of America. “It is [just] the right thing to do.”
Choi said the reforms pointed to a move towards a system in which buyers had greater certainty about what they were purchasing. If homes were increasingly sold after completion, “what you see is what you get”, he said, adding that it also reduced the risk of unfinished projects.

Whether this will translate into stronger sales is another question. Choi said weakness in the housing market was also linked to China’s economic outlook, job and income prospects, as well as expectations that prices could continue to fall.
“If you’re worried that property prices will drop another 10 per cent, then chances are you [will] actually wait to buy,” Choi said.
Fitch Ratings also expected that the changes would have limited effect on near-term demand, though they could improve project delivery and funding discipline.
“Housing demand is likely to remain weak as the mortgage easing is unlikely to offset high inventory levels and low buyer confidence,” Fitch said in a report on Tuesday.
Longer mortgage terms may lower monthly repayments, but Barclays noted in a report last week that they would also increase the total interest paid over the life of a loan.
It added that demographic pressures, income expectations and high housing inventories would remain largely unchanged.
Jeff Zhang, an equity analyst at Morningstar, shared the view that the new policies would have limited impact on boosting demand, but added they would “likely reshape the home supply and funding structures of developers”.
He expected state-owned developers with strong liquidity and a larger presence in higher-tier cities to gain market share. A tighter land pipeline and a growing share of projects in central areas could also help stabilise home prices over time.
Morningstar expected higher-tier cities to show earlier signs of recovery by the end of 2026, although restoring homebuyer confidence could take longer.
The land market could provide one of the first indications of how the reforms were affecting the industry, according to Choi at Bank of America.
“Between higher interest expenses and also lower asset turnover, there will already be a lot of pressure on developers’ earnings,” he said. “But the offset is that land prices should come down.”


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Business

Property

Hong Kong & China

Analysts say lower mortgage payments alone may not persuade buyers to jump in while prices remain under pressure


Analysts say lower mortgage payments alone may not persuade buyers to jump in while prices remain under pressure.


China economy

China

Fitch Ratings

Bank of America

China’s new home finance rules reduce buyer risks but may not revive the market: analysts

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Analysts say lower mortgage payments alone may not persuade buyers to jump in while prices remain under pressure

Analysts say lower mortgage payments alone may not persuade buyers to jump in while prices remain under pressure