Reuters, Beijing As worries of more drops continue, the Chinese government plans to step up measures to stabilize the country's real estate market in 2025. The government-run Recent announcements from a work conference hosted by the housing regulator on Tuesday and Wednesday were covered by China Construction News. The government's resolve to revitalize one of the most important areas of its economy was emphasized by this meeting.

Housing Market Reform

The government's proposals to drastically change the commercial home sales system were the focus of the meeting. The extension of urban village restoration projects, which will surpass the existing goal of constructing one million housing units, is one of these improvements. Informal settlements are a common feature of urban villages, which have long been a center of development; the growth indicates a wider push to modernize urban living spaces.

China also intends to closely control the availability of commercial real estate. By avoiding the overstock that has historically made housing market swings worse, this strategy seeks to balance market demand. In order to meet the demands of migrant workers, young professionals, and new urban residents, the government also plans to increase the supply of cheap housing. The goal of this emphasis on affordability is to lessen the chronic living difficulties that these groups have experienced.

Real Estate Recovery Following a Crisis

The government-led initiative to lower the debt levels of highly leveraged developers ignited a crisis in 2021, which prompted the attempts to stabilize the housing market. The real estate industry was unintentionally put under financial strain by this effort, which resulted in a drop in market confidence and property values.  Since then, officials have increased their interventions and introduced policies aimed at restoring stability and encouraging homebuying.

In addition to tax breaks meant to lower the total cost of real estate transactions, these policies have been in place since September and have included decreases in mortgage rates and minimum down payments. The goal of such policies has been to increase the number of people who can enter the real estate market and stimulate buyer interest.
Indications of Stabilization

According to recent research, these initiatives might be having a beneficial effect. In October and November of 2024, home transactions recorded both year-over-year and month-over-month gains for two consecutive months, indicating that the real estate market was stabilizing. Home prices declined in November at the slowest rate in 17 months, according to government data, further suggesting thatgovernment initiatives are beginning to take effect.

Still, there are difficulties. China's economy depends heavily on the property sector, which generates a considerable amount of the country's GDP. Extended periods of instability in this area may have repercussions for household wealth and overall economic performance. Accordingly, policymakers are under pressure to guarantee a long-term recovery while averting unforeseen repercussions like market overheating.

A Greater Role for Local Governments

At the December work session, a Central Financial and Economic Affairs Commission official stressed the need for immediate measures to stabilize the real estate environment. The official urged policy changes that would have direct and immediate effects and enable local governments to manage the housing stock more actively.

To reduce surplus inventory and provide housing options for people in need, local governments have been granted more authority to buy unsold housing stock. It is anticipated that this program will improve housing availability for marginalized communities while also relieving pressure on developers.

Reasonably Priced Housing for Important Populations

The government's emphasis on affordable housing is a key component of its agenda. Key populations will be the focus of the construction of new inexpensive housing units, such as migrant workers who make substantial contributions to China's urban economies, young professionals starting their careers, and new urban residents adjusting to city life. Policymakers hope to establish a more inclusive housing market that promotes social stability and economic mobility by expanding access to reasonably priced living places.

The More Comprehensive View

Reforms to China's housing sector are a component of a larger initiative to solve the country's basic economic problems. Although the real estate industry has long been a force behind economic expansion, it has also come under fire for encouraging inequality and speculative investment. The government wants to shift the industry toward more sustainable growth by placing a strong emphasis on affordability and stability.

The growth of second- and third-tier cities and urbanization initiatives are two more economic policies that are linked to the stabilization of the housing market. It is anticipated that these regions would be crucial in meeting the need for reasonably priced housing and promoting regional economic expansion. To guarantee balanced and integrated growth, policymakers have stated that housing market reforms and urban planning initiatives would work together.

In conclusion,

The housing regulator in China is working harder to calm the real estate market as 2025 draws near. To move toward recovery, the nation plans to increase affordable housing programs, empower local governments, and reform the commercial housing sales system. A resilient housing market for years to come would require focused measures and ongoing attention to address lingering issues, even though recent data gives hope.