China's real estate policies spur sector recovery: industry watchers

The latest suite of new policies in China's real estate sector will invigorate the property market throughout the fourth quarter, according to industry watchers.

The People's Bank of China and the National Financial Regulatory Administration rolled out a wave of policies, including cutting mortgage rates and minimum down payment ratio, in late September to stabilize the real estate market.

In mid-November, the Ministry of Finance said the country will increase incentives in terms of deed tax to actively support people's essential housing needs to improve their housing conditions.

According to the Ministry of Housing and Urban-Rural Development, October marked three pivotal milestones for the national property market -- the first rise in transaction volume of new homes after 15 consecutive months of decline, the first increase in resold house sales after an eight-month downturn, and property sales in October outstripping those in September, a feat not seen in 17 years.

Dubbed "Golden September and Silver October" by the property market, the two months are considered a peak sales season in the second half of the year. Typically, September is the stronger of the two months as property developers push to hit third-quarter targets.

These shifts show the effectiveness of the favorable policies to stabilize the property sector released in September.

Analysts highlight the impact of a newly implemented policy across first-tier cities, which removes the distinction between ordinary and non-ordinary housing.

The policy exempts individuals who have owned a property for two years or more from paying value-added tax when selling their homes regardless of their property types.

This, they say, will inject fresh impetus into the real estate market, accelerating its recovery and boosting transactions.

With first-tier cities leading the rebound, confidence is expected to spread to other cities, further stabilizing the market.

"Of course, following this round of policy arrangements, the policies are now largely in place. We also anticipate that in the fourth quarter, sales of commodity housing, including in core urban areas, are likely to outperform the same period last year. The previously hesitant sentiment among the public has significantly improved, reflecting a positive shift in market expectations, with activities moving from increased viewing properties to increased purchasing," said Tang Yanbing, director of the Real Estate Market Division of the Chongqing Housing and Urban-rural Development Commission.

The positive outlook is further bolstered by the recent policy-supported expansion of urban village redevelopment, now covering nearly 300 cities at prefecture level and above.

These policies are poised to stimulate demand and supply, offering additional support to the market's recovery.

"The policies for the real estate market truly feel like a warm breeze, boosting everyone's confidence, which I believe is the fundamental target. In my opinion, the increased transaction activity and stronger confidence in the real estate market are likely to continue through the fourth quarter. If our policies exert further support, this trend will become even more pronounced, and the steady recovery and positive momentum will become even more solid," said Wang Ruimin, an associate research fellow at the Institute of Market Economy under the Development Research Center of the State Council.

China's real estate policies spur sector recovery: industry watchers

China will continuously build a robust domestic market to bolster its economy and counter external challenges in accordance with the requirements and arrangement from the annual Central Economic Work Conference, which put domestic demand at the forefront of eight key tasks for next year's economic work, according to experts.

The tone-setting conference was held in Beijing from Wednesday to Thursday in which the Chinese leadership decided priorities for the economic work in 2026.

Over the past four years, domestic demand has contributed an average of 86.4 percent to China's economic growth, according to the National Development and Reform Commission (NDRC), China's top economic planner.

"The top priority is to expand domestic demand as the key reason for this is that our demand is relatively weak. The first step here is figuring out how to increase consumption," said Chen Binkai, vice president of Central University of Finance and Economics.

Consumption has continued to play a leading role in the country's economic growth this year. In the first three quarters, final consumption expenditure contributed 53.5 percent to economic growth, an increase of 9 percentage points compared to the whole of last year.

The annual Central Economic Work Conference proposed that in 2026, a special campaign to boost consumption will be implemented in depth, the supply of high-quality goods and services will be expanded, policies on new and emerging industries will be optimized, unreasonable restrictions in the consumption field will be eliminated, and the potential of service consumption will be unleashed.

"Previously, much of the consumption we have encouraged is for manufactured goods. However, the growth rate of our service sector is not as ideal as that of the manufacturing sector. Therefore, increasing some investment to encourage consumption in the service sector may play a better role in stabilizing growth and expanding domestic demand," said Huang Qunhui, a researcher of the Institute of Economics under the Chinese Academy of Social Sciences.

Experts said that income is the primary factor determining consumption, and only by increasing residents' disposable income, can their consumption capacity be improved.

They also said that the conference, while emphasizing the promotion of consumption, also clearly pointed out the need to formulate and implement a plan to increase the income of urban and rural residents.

"The Third Plenary Session [of the 20th CPC Central Committee] mentioned the need to increase the proportion of residents' income, specifically the proportion of labor compensation within that income. The Fourth Plenary Session [of the 20th CPC Central Committee] further proposed implementing a specific income-increasing plan for urban and rural residents. Of course, consumption is not solely an income issue. We need to strengthen basic public services and improve our social security fund. If these issues are further improved and optimized, and residents have higher incomes, they will be more willing to spend more on consumption, especially on development-oriented consumption," said Huang.

Expanding domestic demand remains top priority for China's economic work in 2026: experts