00:00Yeah, I mean, the property woes. It's now into its fourth or well past its fourth year, into its fifth year, really.
00:06And it is at the heart of all the big issues in the Chinese economy, whether it's persistent deflation, lack of consumption.
00:13It is all tied to, of course, households feeling their wealth effect has deteriorated over the last half decade.
00:22So again, there's been a rising chorus of calls for increased and more forceful property measures.
00:29And according to sources, are saying that the authorities, while they haven't finalized the details, are coming up with a number of different scenarios, including what you're seeing on your screen,
00:40basically providing potentially new homebuyers mortgage subsidies for the first time, also raising income tax rebates for mortgage borrowers and lowering home transaction costs.
00:50Keep in mind, there have been a number of steps, in particular in the tier one cities of Beijing, Shanghai and Shenzhen, of easing multiple purchases.
01:00And also, of course, the some of the lowering of loan thresholds back in August.
01:07It simply hasn't kindled, rekindled interest in the property sector.
01:13So again, as I said, more forceful policy support is being called for.
01:17And it looks as though authorities, including the housing ministry and other authorities, are looking at a number of different plans.
01:24Timing and specifics of those proposals are not known.
01:28So again, we can't put a lot of meat on it other than to say the plan has been in discussion since the third quarter and seems to be gathering some speed.
01:39The question is, will it be enough and how big they need to be, given that we've seen a slump of about four years?
01:50Yeah, that's right. So, you know, we have to look at Bloomberg Intelligence.
01:54Their take is they're talking about hundreds of billions of yuan in negative equity, a trend that is likely to be accelerating into 2026.
02:04That's going to put more pressure on the, you know, the banks, obviously.
02:11And it's going to lead to, you know, some serious questions about bondholders and their repayment values, of course.
02:18This is what Bloomberg Intelligence says.
02:21Hundreds of billions of yuan of mortgages are likely in negative equity right now, a trend that is likely to intensify,
02:27which will weigh on buyers' confidence and contribute to further home sales decline.
02:33So again, the threatening of the destabilization of the financial system is probably the number one and the paramount concern of authorities right now as they head into 2026.
02:45Keep in mind, we've just had closed door meetings in the last couple of weeks by the top policymakers as they're coming up with the next five-year plan
02:51that will also likely come to light at the National People's Congress in March.
02:56So these plans are probably coming forward and will materialize in the coming months.
03:01But a lot of people that we've spoken to say there might be even more urgency that some of these policies need to come out before the NPC meets in the first part of March.
03:13As you said, no sense of the timing of such measures, but it is critical.
03:18Timing is critical.
03:20Yeah, absolutely it is.
03:23And that's why these calls are growing in earnest and in seriousness, because, again, it goes back to the financial viability and whether the rise in non-performing loans.
03:37You have all those households.
03:39So many of these households are sitting on negative equity because of their household wealth, upwards of 60 percent of household wealth tied to property.
03:46And that's going to see some significant impact on the balance sheet and the loan portfolios of the nation's financial system.
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