Relaxing real estate policies must be done with eye on risks

Since the beginning of this year, more than 60 cities in China have adjusted their real estate policies, increasing financial support for real estate enterprises and housing loans for individuals, and lowering the proportion of down payments and loan interest rates.

Actually, the financial authorities began "rectifying" their real estate policies last October, after finding them to be too tight and strict. Financial institutions have taken measures to gradually meet the reasonable financing needs of real estate enterprises and housing loan demands of homebuyers.

China's economy faces considerable downward pressures because of numerous factors. Steady growth, therefore, remains a priority. As the real estate industry is linked to a large number of upstream and downstream enterprises and plays an important role in stabilizing growth, its development has a bearing on the overall stability of the macro economy. Adjusting excessively tight real estate policies will, therefore, help stabilize expectations and growth.

Over the past year, China's real estate market is seeing some new problems, such as real estate enterprises failing to repay maturing debts. The overall risk is controllable, but the country needs to attach importance to preventing risks.

Moderately adjusting real estate financial policies will help defuse risks and protect the legitimate rights and interests of housing consumers. The central bank has used a variety of monetary policy tools to conduct counter-cyclical and cross-cyclical regulations, resulting in an increase in interbank liquidity and a decline in fund costs. In the face of insufficient demand for effective credit, commercial banks regard housing loans as high-quality assets and hope to increase housing credit supply through more flexible policies to stimulate people's willingness to buy houses and maintain credit growth.

Due to rapid real estate development in the past, a large amount of financial resources have flowed into the real estate market, increasing the macro leverage ratio and accumulating financial risks, while squeezing services for small and micro enterprises. So, it is necessary to regard real estate financial policies as an important means of real estate regulation while adhering to the policy of "housing is for living in, not for speculation" in order to reduce financial and real estate bubbles.

However, real estate financial policies should be adjusted in a gradual, planned, step-by-step manner. Last year, some local governments adopted a one-size-fits-all approach, some of which will need to be corrected.