TMTPost -- Shares of China’s property developers soared Wednesday as a new press on housing sparked investors’ hope that Beijing will further stimulus to revive the beleaguered real estate sector.

Credit：Xinhua News Agency

The mainland China's CSI 300 Real Estate index closed 5.1% higher and Hong Kong's Hang Seng Mainland Properties Index up 3.4%. Shanghai-listed shares of Gemdale Corporation, Cinda Real Estate, Langold Real Estate hit their daily trading limit with a gain of around 10%. Hong Kong-traded shares of Ronshine China skyrocketed 121.4%, while shares of Sunac, Kaisa, Guangzhou R&F Properties and Vanke surged 40%, 38.5%, 32.7% and nearly 19%, respectively. In comparison, the mainland benchmark SSE Composite Index eked out a gain of 0.05% while Hong Kong’s Hang Seng Index edged down almost 0.2%.

The property shares with broad double-digit gains came as the chief information office of the State Council of China announced an upcoming press conference on housing Thursday. The State Council Information Office (SCIO) said it will hold the conference at 10:00 a.m. Beijing Time, and senior officials from a wide range of government agencies will introduce measures on promoting stable, healthy growth of Chinese property market and answer questions from reporters. Minister of Housing and Urban-Rural Development  (MOHURD) Ni Hong, along with officials from Ministry of Finance (MOF), Ministry of Natural Resources (MNR), the People's Bank of China (PBOC) and the National Financial Regulatory Administration (NFRA) will join in the press conference.

This is the third key press conference that attracted great attention of the broader market following an extraordinary flurry of stimulus measure late September. Pan Gongsheng, governor of the PBOC, said on September 24 the central bank decided to cut the reserve requirement ratio (RRR) by a half percentage points, or 50 basic points (BPs), providing about RMB 1 trillion in long-term liquidity to the financial market.

Depending on the liquidity situation in the market, RRR may be further lowered by 25 to 50 BPs within the year, and the interest rate of seven-day reverse repurchases would also be reduced from 1.7% to 1.5%, Pan said.

Pan also announced China’s biggest package yet to boost its property market. He said China will lower mortgage rates on existing home loans to a level similar to those of newly issued housing loans. The average reduction in mortgage rates for existing home loans is expected to be around 50 BPs, he said. 

"The new policy, which is conducive to further reducing borrowers' mortgage interest expenses, is expected to benefit 50 million households, or a population of 150 million," said Pan. This move is expected to reduce the total interest expenses for households by approximately RMB150 billion per year on average, which will help boost consumption and investment, Pan added.

The PBOC and the MOHURD rolled out a slew of policies on September 29 to to ease the financial burden born by property owners. The mortgage rates for first homes, second homes and more are to be reduced by no lower than 30 basis points below the loan prime rate (LPR) by October 31, 2024. The new policy is expected to benefit 50 million households, equal to around 150 million people, and reduce the total interest expenses for households by approximately 150 billion yuan (about 21.41 billion U.S. dollars) per year on average, the PBOC said. In addition, the minimum down payment ratio for individuals' commercial housing mortgages will be lowered to no less than 15 percent for both first- and second-home purchases.

Earlier this month, two press briefings chaired by the National Development and Reform Commission (NDRC) and the MOF disappointed investors. The NDRC, China’s top economic planner, pledged a raft of economic stimulus at press conference, though it still fell short of investors’ anticipation of a much larger package of stimulus measures. The Minister of Finance Lan Fo'an told reporters his ministry will increase the debt ceiling on a relatively large scale in a lump sum to replace existing hidden debts of local governments and help defuse their debt risks, apply a set of fiscal policy tools including local government special-purpose bonds, special funds and taxation policies to help stabilize the sector. Calling it "the strongest debt alleviation measure introduced in recent years," Lan left out of key details on scale of the new package of targeted incremental fiscal policy measures.

 The focus of Thursday's briefing will likely be on the inclusion of more projects onto the "white list" to ensure housing delivery, accelerate local governments’ purchase of unsold homes for affordable housing, as well as to reinvigorate the land market, said Kristy Hung, an analyst at Bloomberg Intelligence in Hong Kong. The white list is a collection of residential projects deemed suitable for financial support. “We will likely need to see more quantifiable targets or funding to convince investors that there could be material improvement in the fundamentals for China property,” Hung said.