RRR Cuts, Interest Rate Cuts, and Reduction in Provident Fund Interest Rates Bring Further Positive News to the Property Market; Real Estate Stocks Rise, Sanxiang Impression Hits Daily Limit [[SMM Flash News]]

SMM News on May 7:

On May 7, influenced by positive news such as the "one bank, one bureau, one commission" making significant announcements and the real estate market receiving a package of policy support, the real estate sector opened significantly higher in the morning session, with the real estate development sector once surging over 3%. However, as various positive news came into effect, the gains pulled back somewhat. As of 13:57 on May 7, the real estate development sector was up 1.34%. Among individual stocks, Dasanxiang Impression and Tianbao Infrastructure hit the daily limit, while Xinhualian, Chongqing Development, and Huali Family led the gains. On the news front, on May 7, Pan Gongsheng, Governor of the People's Bank of China (PBOC), stated at a State Council Information Office press conference that the reserve requirement ratio (RRR) would be cut by 0.5 percentage points, expected to provide approximately 1 trillion yuan in long-term liquidity to the market; the policy interest rate would be lowered by 0.1 percentage point, with the 7-day reverse repo operation rate in the open market adjusted from the current 1.5% to 1.4%, expected to drive the Loan Prime Rate (LPR) down by approximately 0.1 percentage point in tandem; the interest rate on personal housing provident fund loans would be reduced by 0.25 percentage point, with the interest rate for first-time homebuyers on loans over five years dropping from 2.85% to 2.6%, and interest rates for other tenors adjusted accordingly; the National Financial Regulatory Administration (NFRA) would introduce eight incremental policies, including improving the financing system for the real estate sector...

News Front

[Pan Gongsheng, Li Yunze, Wu Qing Make Significant Announcements! Regarding RRR Cuts, Interest Rate Cuts, Stock Market, Real Estate Market...] At 9 a.m. on May 7, the State Council Information Office will hold a press conference, inviting heads of the People's Bank of China, the National Financial Regulatory Administration, and the China Securities Regulatory Commission to introduce the "package of financial policies to stabilize the market and expectations". PBOC Governor Pan Gongsheng, NFRA Director Li Yunze, and CSRC Chairman Wu Qing will attend the conference. The PBOC announced that starting from May 8, the 7-day reverse repo operation rate in the open market would be lowered by 0.1 percentage point. Starting from May 15, the RRR for financial institutions would be cut by 0.5 percentage point. Starting from May 8, the interest rate on personal housing provident fund loans would be reduced by 0.25 percentage point. The RRR for auto finance companies and financial leasing companies would be cut by 5 percentage points. Starting from May 7, the rediscount rate would be lowered by 0.25 percentage point. Starting from May 8, the standing lending facility rate would be lowered by 10 basis points. It was decided to increase the quota for re-lending to support agriculture and small businesses by 300 billion yuan. It was also decided to increase the quota for re-lending to support technological innovation and technological transformation by 300 billion yuan. Li Yunze stated that eight incremental policies would be introduced recently, including accelerating the introduction of a series of financing systems compatible with the new model of real estate development, further expanding the scope of pilot programs for long-term investment by insurance funds to introduce more incremental funds into the market, adjusting and optimizing regulatory rules, reducing the risk factor for insurance companies' stock investments to support a stable and active capital market, promptly introducing a package of policies to support financing for small and micro enterprises and private enterprises, formulating a series of policy measures for the banking and insurance sectors to support the development of foreign trade, providing precise services to market entities significantly affected by tariffs, revising the management measures for merger and acquisition loans, increasing investment in science and technology innovation enterprises, and formulating opinions on the high-quality development of technology insurance.Wu Qing, Chairman of the China Securities Regulatory Commission, stated at a press conference held by the State Council Information Office that they would make every effort to consolidate the momentum of market stabilization and improvement, dynamically improve work plans to address various external risk attacks, and fully support the role of Central Huijin Investment Ltd. as a quasi-stabilization fund. 》Click to view details

【PBOC: Reduces individual housing provident fund loan interest rates by 0.25 percentage points from May 8】The People's Bank of China (PBOC) issued a notice regarding the reduction of individual housing provident fund loan interest rates. The PBOC decided that, starting from May 8, 2025, individual housing provident fund loan interest rates would be reduced by 0.25 percentage points. The interest rates for first-home individual housing provident fund loans with terms of 5 years or less (including 5 years) and over 5 years would be adjusted to 2.1% and 2.6%, respectively. The interest rates for second-home individual housing provident fund loans with terms of 5 years or less (including 5 years) and over 5 years would be adjusted to no less than 2.525% and 3.075%, respectively.

【Li Yunze: Accelerates the issuance of loan management measures for real estate development, individual housing, and urban renewal】Li Yunze, Director of the National Financial Regulatory Administration, stated at a press conference held by the State Council Information Office that, as of now, the approved loan amount for the real estate "white list" had increased to 6.7 trillion yuan. The balance of real estate loans in Q1 increased by more than 750 billion yuan, with new individual housing loans achieving the largest single-quarter increase since 2022. Housing rental loans in Q1 increased by 28% YoY. Li Yunze stated that they would accelerate the issuance of loan management measures for real estate development, individual housing, and urban renewal. (Financial News)

【Zhuhai: Encourages "trade-in" of housing, with a maximum subsidy amount of no more than 30,000 yuan per unit】Zhuhai recently issued "Several Measures to Promote High-Quality Development of the Real Estate Market in Zhuhai City," which proposes encouraging the "trade-in" of housing. Residents participating in the "trade-in" of housing will be given a special housing purchase subsidy of 1% of the online contract price of the newly purchased housing, with a maximum subsidy amount of no more than 30,000 yuan per unit. The subsidy policy is valid for one year. A unified platform for the "trade-in" of housing will be established, synchronously linked with the government's online approval process, to achieve online "one-stop" handling of business transaction procedures. The cross-bank handling of "transfer with mortgage" business will be vigorously promoted. Taxpayers who sell their own housing in Zhuhai City and repurchase housing within the city within one year will be refunded the individual income tax they paid when selling their own housing in accordance with national policies.

【Shanghai's property market continues to improve during the Labour Day holiday, with trading volume up 36% YoY】It was learned from the Shanghai Housing Management Bureau that during this year's Labour Day holiday, Shanghai's property market continued to show signs of stabilization and improvement, with trading volume for both new and second-hand housing up 36% YoY.In the primary housing market, statistics from the Shanghai Housing Authority show that during the Labour Day holiday, the trading volume of new homes in Shanghai increased YoY, with a 12% YoY rise in trading volume over the five-day holiday.

[CRIC: Q1 Real Estate Market Stabilizes, Second-hand Housing Market in Beijing, Shanghai, Shenzhen, and Hangzhou Sees 17% YoY Increase in Trading Volume]CRIC Real Estate reported that in Q1, the real estate market stabilized, with the second-hand housing market in Beijing, Shanghai, Shenzhen, and Hangzhou experiencing increased volume and stable prices, a 17% YoY increase in trading volume, a recovery in demand for high-end and luxury properties, and a halt in price declines for affordable housing. As a leading indicator for the new housing market, the second-hand housing market promotes market expectation recovery and accelerates overall market stabilization. The second-hand housing market, as a "barometer" for the new housing market, on one hand, has leading indicator characteristics and is more sensitive to policies; on the other hand, the stabilization of second-hand housing prices also helps stabilize expectations for the new housing market.

[April Land Auction Remains Hot: Developers Bet on Core Cities, Average Premium Rate for Residential Land in 22 Cities Rises to 28%]In the land market in April, Hangzhou performed remarkably, with multiple plots achieving premium rates exceeding 50%. Not only Hangzhou, but also Nanjing, Suzhou, Chongqing, and Chengdu saw high-premium transactions for residential land. Overall, the land auction heat in key cities continued in April. Data from the China Index Academy shows that from April 1 to 22, the average premium rate for residential land in 22 key cities was 28%, the highest since October 2023. According to data from the Shanghai E-House Real Estate Research Institute, as of April 27, the premium rate for residential land in 25 key cities nationwide in the first four months of this year was 19%, an increase of 13 percentage points compared to the 6% premium rate for the entire last year.

[January-April Land Acquisition by Key Developers Increases 26.6% YoY]The China Index Academy recently released the "Top 100 National Real Estate Enterprises Land Acquisition Ranking for January-April 2025," showing that the total land acquisition by the top 100 enterprises in January-April 2025 was 360.8 billion yuan, a 26.6% YoY increase, with the growth rate decreasing by 4.0 percentage points MoM. The land auction heat in hot cities continued in April, with the land transfer revenue for residential land in 22 cities in January-April 2025 increasing by over 40% YoY. This growth reflects both the fierce competition among developers for high-quality plots and the value of land in core regions. In terms of new value, Greentown China, China Jinmao, and Poly Development ranked in the top three.

[Multiple Real Estate Projects Launch Before the Holiday, Real Estate Also Celebrates "Labour Day"]Real estate projects in Guangzhou and Changsha are fully preparing for the "Labour Day," with dozens of projects choosing to launch before the holiday; Shenzhen has launched the "Labour Day New Home Festival"; the property market in Nanchang announced it will remain open during the holiday; Chongqing has chosen to offer 20,000 discounted units before the holiday.Why are property markets across the country vying to make the most of the "Labour Day holiday"? Firstly, the signals of a market upturn are becoming increasingly evident. Secondly, all parties have formed new judgments on "stabilizing the property market". Thirdly, the industry is taking action to consolidate the hard-won positive momentum. Therefore, it's not just this Labour Day holiday that will be busy for the property market. It is believed that after the Labour Day holiday, regions will continue to be busy exploring ways to further unleash demand and improve supply, implementing city-specific policies to activate market vitality. (CCTV News)

[Wuhan: Families with two or three children purchasing newly-built commercial housing across the city will receive housing purchase subsidies of 60,000 yuan and 120,000 yuan, respectively] The Wuhan Housing and Urban Renewal Bureau and multiple other departments issued a notice on continuously consolidating the stable momentum of the real estate market, optimizing housing loan services for young people. Commercial banks are encouraged to provide specialized housing loan financial products and diversified repayment methods for young people working or starting businesses in Wuhan. The housing provident fund loan policy is optimized. The maximum loan amount for the second personal housing provident fund loan is increased to be consistent with that for the first home loan. Support for employees who transition from renting to purchasing is enhanced, allowing the rental extraction amount to be incorporated into the deposit balance for calculating the loan amount. The acquisition efforts for "trade-in" are increased. State-owned enterprises and various market entities are encouraged to acquire individual second-hand homes to promote the "trade-in" initiative. Active efforts are made to carry out cross-district "trade-in" for housing, with the city planning to acquire 3,000 individual second-hand homes for various rental housing and resettlement housing purposes. Support for upgrading housing purchase needs is continuously provided. Before December 31, 2025, families that sell their self-owned homes within the year and purchase newly-built commercial housing within six months, or purchase newly-built commercial housing and then sell their original self-owned homes within 12 months, will receive a full subsidy for the newly-purchased commercial housing from the district where it is located, based on the actual amount of deed tax paid. The scope of housing purchase support for families with multiple children is expanded. From May 1 to December 31, 2025, families with two or three children who comply with the national family planning policy and purchase newly-built commercial housing across the city will receive housing purchase subsidies of 60,000 yuan and 120,000 yuan, respectively. Support for purchasing commercial and office properties is increased. From May 1 to December 31, 2025, individuals purchasing newly-built commercial and office properties for non-business purposes will receive a 50% subsidy based on the actual amount of deed tax paid. The minimum down payment ratio for commercial loans is reduced from 50% to 45%, and the loan interest rate is determined independently by commercial banks based on relevant principles of loan risk management.

[Henan: Strengthen loan disbursements for real estate "white list" projects and expand the scale of acquiring existing commercial housing] The General Office of the People's Government of Henan Province issued "Several Policy Measures for Striving in Q2 to Ensure 'Achieving Half of the Annual Targets'", which mentions strengthening loan disbursements for real estate "white list" projects and expanding the scale of acquiring existing commercial housing, with the goal of basically completing the delivery of projects to ensure housing delivery by the end of June 2025.Elderly households purchasing products for home renovations to suit the needs of the elderly will receive subsidies amounting to 30% of the total cost of such products, with a maximum subsidy of 12,000 yuan per household.

【NDRC: Measures to foster a stable and favorable environment for development will primarily involve maintaining stability and vitality in the capital market, and sustaining the stable trajectory of the real estate market】 Zhao Chenxin, Deputy Director of the National Development and Reform Commission (NDRC), introduced at a press conference held by the State Council Information Office on April 28 that measures to stabilize employment, the economy, and promote high-quality development encompass five key areas. Among these, fostering a stable and favorable environment for development primarily includes measures such as maintaining stability and vitality in the capital market, sustaining the stable trajectory of the real estate market, and increasing financial support for the real economy.

Various Perspectives

A research report by Huatai Securities points out that as we enter Q2, the window for incremental policies in the real estate sector is gradually opening. Given the more proactive macroeconomic and fiscal policy orientations, attention should be paid to the pace of implementing practical policies. Looking ahead, considering the greater policy flexibility in first-tier cities, there is greater optimism about the recovery pace of core cities represented by first-tier cities, as well as the valuation recovery of real estate enterprises with reserves or newly acquired resources in corresponding regions.

SPDB International notes that measures such as RRR cuts and interest rate cuts by the PBOC, as well as reductions in housing provident fund loan interest rates, are in line with previous expectations. The simultaneous announcement of these measures underscores the government's determination to stabilize growth amid the backdrop of tariff wars. Going forward, policies will continue to be implemented to offset the negative impacts of tariff wars on the economy.

A research report by China Galaxy Securities states that the recent Political Bureau meeting proposed "sustaining the stable trajectory of the real estate market" and separately mentioned aspects such as urban renewal, new development models, high-grade housing supply, and acquisition of existing housing stock. Galaxy Securities believes that with the strong impetus from policies, residents' rigid and improvement-oriented housing demand is expected to be further released, and support for the acquisition of existing commercial housing is expected to be further enhanced, potentially sustaining the stable trajectory of the real estate market. Galaxy Securities also believes that leading real estate enterprises, demonstrating excellent operational management capabilities and financial advantages, are expected to further increase their market share.

The meeting of the Political Bureau of the CPC Central Committee pointed out that efforts should be intensified to implement urban renewal initiatives, and advance the renovation of urban villages and dilapidated houses in a forceful and orderly manner. Accelerate the construction of a new model for real estate development, increase the supply of high-grade housing, optimize policies for the acquisition of existing commercial housing stock, and sustain the stable trajectory of the real estate market. Yan Yuejin, Vice President of the E-House China Research and Development Institute, stated that overall, the policies for the subsequent development of the real estate market are clear. The meeting has provided a clear direction for the subsequent development of the real estate market, particularly for Q2, and has put forward specific requirements in areas such as risk prevention, optimizing existing stock, and optimizing supply, which are of great significance for promoting the stable and healthy development of the real estate market. (Cailian Press)

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