With the goal of establishing a long-term real estate regulation mechanism, the People’s Bank of China (PBOC) has proactively promoted a prudential management mechanism for real estate finance.
In August 2020, the central bank and the housing ministry jointly issued the “three red lines” policy for 30 major property developers. Then, in December 2020, the PBOC and the banking regulator set caps on the share of outstanding mortgages and developer loans in total loans, in a bid to control their growth. These two policies echoed each other and soon achieved results in curbing leverage in the real estate sector. After China Evergrande Group became mired in a debt crisis earlier this year, market expectations for the real estate industry have nosedived.
Policymakers’ stance of “houses for living in, not for speculation” is in line with the public’s long-term interests….