Policymakers trying to revive property sales

China’s beleaguered property developers may soon see some respite both from their inability to borrow at reasonable rates and from sliding property sales. Last week, PBOC Governor said that the government would “correct the contraction in credit to private property developers as soon as possible.” The Three Red Lines aren’t being abandoned but many lenders went beyond what that they required. The message now is that it’s time to ease off. Meanwhile, policymakers across the country are trying to drive a pick-up in sales as Omicron restrictions are eased. Dozens of cities have relaxed or abolished limits on purchases. The PBOC this month cut the benchmark rate for mortgages (while not cutting the equivalent benchmark for corporate loans), and it lowered the floor for mortgage rates. Many banks are now offering mortgages at the lowest rates in years. Sales are in a structural decline but these moves should lead to a short-term bounce, as long as further major lockdowns are avoided. It was the Omicron lockdowns that snuffed out the sales recovery after the initial relaxation of property controls last October.