On the plus side: a Communist Party journal last month called for “strong policy actions” to help the industry, and regulators last week appeared to have done away with the “three red lines” policy of caps on developer debt ratios that limited bank lending – rules that sparked the property sector’s debt crisis in 2021.
Among other encouraging signs, developers of certain favoured projects will be granted five-year extensions on loans, sources said last week. China also plans to expand its REIT market.
And on Friday, state-owned Yuexiu Property and China Overseas Grand Oceans launched dim sum bond sales in Hong Kong, another indication of improving sentiment.
The run of upbeat news has helped lift shares in the sector with the CSI 300 Real Estate Index climbing 5% for the year to date.
PROPERTY EXECS PROPERLY DESPONDENT
But executives with boots on the ground feel differently.”I don’t see how private developers are going to survive,” said a senior executive at a Shanghai-based firm, one of many developers to have defaulted on debt in the wake of the liquidity crunch triggered by the “three red lines” policy.
His company has not been able to secure new loans from banks despite offering collateral and despite the policies put in place to encourage lending to the sector, the executive said, declining to be identified due to the sensitivity of the topic.
Investors are focusing on the potential for more policy support from annual plenary meetings of the National People’s Congress and the Chinese People’s Political Consultative Conference in March, as well as a Politburo meeting in April.
But a senior executive at a state-owned developer, who also declined to be identified, said he does not expect strong stimulus or other measures that would significantly change the market this year.
That’s largely because over the last five years, traditional measures have already been taken – rates have been lowered, swathes of restrictions on homebuying have been lifted and banks have been encouraged to provide loans.
The apparent abolishment of the “three red lines” policy, as reported by a ministry media outlet, was also somewhat symbolic. Developers and analysts note the rules had de facto been relaxed for some time without noticeable changes in bank lending practices.
Robert Ciemniak, CEO of research firm Real Estate Foresight, said he expects the policymaking paradigm to remain “support not stimulus”. Developers could benefit if there were an expansion of a scheme whereby local governments buy back land and unsold housing developments to turn them into affordable housing, he added.The pain of sliding home sales
The sector’s debt crisis and the ensuing glut of unfinished apartments have weighed heavily on the world’s second-largest economy, which is also grappling with the fallout of heightened trade tensions with the U.S.
Slow economic growth combined with rising job and financial insecurity has knocked homebuyer confidence, and home prices continue to fall.
It is still too early to say that the property market has stabilised, UBS analyst John Lam said in a note to clients, highlighting weak sales of new homes and adding that any real recovery should be underpinned by rising household income.
China’s new home prices in December dropped 2.7% year-on-year, quickening from a 2.4% fall in the previous month and marking the fastest decline in five months.
Separate data showed property investment in China tumbled 17.2% in 2025 while home sales by floor area decreased 8.7%. New home prices are expected to decline another 3.7% in 2026, a quarterly Reuters survey showed.
That will continue to spell pain for Chinese property developers struggling to make good on their debt obligations.
The crisis has claimed China Evergrande, once the country’s largest developer, which is now in liquidation, while Country Garden, another big name, recently completed a restructuring of its offshore debt.
China Vanke, known for major projects in the country’s biggest cities, recently gained creditor approval to defer some repayments, staving off a potential default.
But credit analysts have said Vanke will likely follow a similar path to other cash-strapped Chinese developers and is likely to eventually seek a debt restructuring.