MNI: China To Target City Specific Near-term Housing Stimulus

Authorities are likely to focus any near-term property market stabilisation efforts on targeted, city-level measures, advisors and analysts told MNI, with central officials expected to hold policy steady at the upcoming Central Economic Work Conference (CEWC) and adopt a wait-and-see approach before considering broader nationwide steps such as mortgage subsidies. 

Tier-one cities Beijing, Shanghai and Shenzhen still have scope to relax home-purchase restrictions further, while local governments may roll out homebuying subsidies depending on fiscal capacity and expand credit support via more preferential housing provident fund policies, said Xie Yifeng, dean at the China Urban Real Estate Research Institute.

Pushing back on recent media reports that nationwide mortgage subsidies are under consideration, Xie said such measures remain unlikely in the near term. Only one district in Wuhan city currently offers an interest subsidy of up to 2% of the initial loan amount, capped at CNY40,000 per household. “Chances for a nationwide stimulus may wait until the second or third quarter of next year, should the market accelerate its decline through Q1,” he added.

Yan Yuejin, vice president at the E-House China Research and Development Institute, said the CEWC is expected to reiterate the priority of stabilising the housing market, with any new round of stimulus likely assessed around March, noting that the pre-Spring Festival period is typically the off-season. (See MNI: China's Positive 2026 Policy Tone Aimed At 5% GDP)

FISCAL SUBSIDIES

Lian Ping, director at the China Chief Economist Forum, could not rule out the possibility of subsidies, as lenders' continuously narrowing net interest margins constrain further major mortgage-rate cuts. Authorities could issue ultra-long-term special treasury bonds to subsidise first-home mortgage interest, similar to this year’s 1% consumer-loan subsidy scheme, he suggested, estimating that a subsidy of CNY50 billion is expected to generate CNY400-500 billion in new credit. 

Analysts at Founder Securities estimated that commercial banks issue CNY3-4.5 trillion in personal housing loans annually, implying that a 1% subsidy on new borrowing would cost CNY30-45 billion. They proposed a two-year pilot in tier-one and core tier-two cities, where the inversion between rental yields and mortgage rates is most pronounced. 

Such a policy could help with stabilising home prices and protecting the value of collateral, rather than merely boosting sales, the analysts said. Rental yields currently stand at 1.61% in Beijing, 1.89% in Shanghai and 1.76% in Shenzhen, versus a national average new-mortgage interest rate of 3.06% in Q3. (See MNI: China's Lower Home Prices To Pressure Bank Disposals)

LOWER COSTS

Although a nationwide mortgage-subsidy scheme may not be rolled out soon, Xie said cuts to housing transaction taxes and fees are more likely in the near term, citing the possible elimination of the deed tax for first-home buyers and a halving for second-home purchases. For the secondary market, he suggested removing value-added and individual income taxes for homes sold after five years of ownership. 

Yan said measures aimed at accelerating second-hand market turnover are crucial to help unlock upgrade demand.

The downturn has intensified in recent months, with both sales volumes and prices falling. Year-on-year declines in new-home sales by area and value widened to 19.0% and 24.2% respectively in October. The new-home price index for 70 major and medium-sized cities fell 0.5% m/m, accelerating from a 0.4% decline in September, marking the largest drop since October 2024.