Will Favourable Real Estate Policy Boost Demand for Construction Steel?

Since the establishment of the dynamic mechanism to regulate mortgage rates for first houses at the beginning of this year, many cities across the country have lowered the lower limit of the first-home mortgage rates. As of now, more than 30 cities have brought down the mortgage rates for first houses to below 4%.

The further reduction of mortgage rates will help reduce the mortgage costs of home buyers, their pressure to make monthly repayment, and concerns over future uncertainty. While meeting the housing demand, the practice can also stimulate housing purchases, thereby promoting a virtuous circle and stable development of the real estate market.

This new policy is aimed to stabilise the housing prices at the average level in 2022.

In general, under the guidance of "housing is for living, not for speculation", a series of favourable policies have been introduced to boost the domestic real estate sector since last year. The mark expectations for the recovery of the real estate market this year have also continued to enhance. In addition to the cuts in mortgage rates for first houses, many cities have introduced more stimulus to fuel housing purchases, such as housing purchase subsidies and rewards for enterprises standing out in sales promotion.

Apart from the boost on the demand side, the regulations on real estate sector on the supply side are also loosened. It is expected that improvements in real estate sales and financing in the future will gradually boost the investment. The housing construction completion may see a significant improvement.

Looking ahead, if the optimistic expectation for sustainable improvement in real estate sector is failed, the earlier winter stockpiling inventory will pressure on steel prices. However, the decline in steel prices will be limited as the current inventory and output are still low.