Media365
Stronger stimulus measures are needed to halt the decline in China’s embattled property sector, as Beijing aims to guide the national economy towards a stable and healthy trajectory, according to Citigroup.
An incentive package – including interest rate reductions, tax cuts, further relaxation of home purchase restrictions and the buy-back of idle land – could help revitalise the real estate industry, said Yu Xiangrong, Citi’s chief economist for Greater China, during a media briefing in Shanghai on Thursday.
“If Beijing targets a 5 per cent growth next year to sustain its economy, it has to expand domestic demand,” he said. “Efforts must be made to stabilise the property sector to encourage consumer spending.”
China’s economy expanded 5.2 per cent in the first three quarters of this year, making it likely to meet Beijing’s full-year growth target of 5 per cent. However, Yu predicted that the country’s gross domestic product would only rise 4.7 per cent next year.
Citi has joined the ranks of international banks advocating for more aggressive policies to support mainland China’s property market, which has been in a downward spiral since early 2022.
UBS and Goldman Sachs have also proposed measures to stabilise home prices and boost housing transactions as Beijing seeks to restore momentum to the world’s second-largest economy.
The property sector and related industries, such as home appliances and construction materials, account for about a quarter of the country’s economic output.
