China’s real estate market is deep in a debt quagmire, with sluggish sales. Recently, the Ministry of Finance and the central bank of the Chinese Communist Party (CCP) once again announced financial measures to stimulate the economy and rescue the property market, including the first-time interest subsidies for housing loans and a reduction in the one-year mortgage loan rates. Industry insiders believe that the Chinese housing market is no longer just a matter of high or low prices, but a complete collapse of market confidence.
Prime Minister Li Keqiang of the State Council of the CCP chaired an executive meeting on September 28th, instructing the introduction of a batch of effective incremental policies to address the problems emerging in the current economic operation and to enhance fiscal expenditure arrangements.
On September 29th, the Ministry of Finance, the central bank, and the China Banking and Insurance Regulatory Commission jointly issued a notice “Regarding the Implementation of a Housing Loan Interest Subsidy Policy for Residents,” stating that starting from October 1, 2026, the policy of subsidizing residents’ housing loans will be implemented for a temporary period of one year.
According to reports, this is the first time that the central finance directly introduced an interest subsidy policy for individual commercial housing loans, with the finance department providing a 1% annual interest subsidy. At the current level of interest rates for first-time commercial individual housing loans, this equals a one-third interest rate discount, with a maximum subsidy period of 5 years. For a long-term commercial individual housing loan of 1 million yuan, the subsidy policy can help borrowers save nearly 50,000 yuan in cumulative interest payments.
Political observer Xia Yan believes that by setting hard indicators for property attributes and loan types through policies, the authorities reveal their intention to rescue the property market, i.e., increasing the sales volume of new homes: it must be a new commercial individual housing loan for purchasing a first home, excluding existing loan replacements, meaning those repaying mortgages do not enjoy this policy. Groups related to purchasing affordable housing with loans or purchasing housing using housing provident fund loans are also not eligible for this policy support.
He said that according to institutional calculations, if interest subsidies of 1% are implemented for all new housing loans and existing housing loans, the annual expenditure may exceed 300 billion yuan; if only applied to new housing loans, the total expenditure could be up to 40 billion yuan. How the central finance will raise this additional funding is currently unclear.
Currently, China’s real estate market continues to languish. According to preliminary statistics from China Index, in the first three quarters of 2026, the transaction area of newly built residential properties in 100 key cities decreased by approximately 10% year-on-year. In September, the sales area of new residential properties in key cities decreased by about 7% year-on-year, with an overall year-on-year decline of about 5% in the third quarter.
Data from the National Bureau of Statistics of the CCP shows that from January to August 2026, the sales area of new commercial housing nationwide was 5.0 billion square meters, a year-on-year decrease of 12.1%. According to the “China Housing Stock Report 2026,” by the end of 2025, the total area of urban residential housing stock in China had reached 35.22 billion square meters (approximately 377 million housing units).
The China Index Research Institute believes that it will take time for people’s willingness and ability to purchase homes to recover, and short-term new home sales may continue the trend of bottoming out.
On September 18th, Zhang Xuetao, Director of the Real Estate Market Supervision Department of the CCP Ministry of Housing and Urban-Rural Development, stated that the current real estate market has entered the era of existing property.
Economic blogger “Huihu” recently stated that he had been in the real estate industry in China for 20 years. Slowing economic growth, declining income expectations, deteriorating employment environment, coupled with the long-term decline in real estate causing shrinking wealth, have led to significant losses for the elite group that previously supported housing prices in this wave of severe downturn and deflation. Many face company closures or bankruptcy, with massive wealth losses. In 2026, the Chinese housing market is no longer simply a matter of price levels but a complete collapse of market confidence.
On the same day, the CCP central bank announced additional financial measures to stimulate the economy: first, lowering the rate of pledged supplementary lending (PSL) from 1.75% to 1.5%; second, expanding support areas for pledged supplementary lending. The construction of the “six networks,” including water networks, new energy grids, computing power networks, next-generation communication networks, urban underground utility networks, and logistics networks, will be included in the support areas for pledged supplementary lending; third, increasing the limit for technology innovation and technical transformation refinancing by 200 billion yuan, and unifying the support ratio for this refinancing from 60% to 100%; fourth, increasing the limit for agriculture and small and micro enterprise refinancing by 500 billion yuan, including a 300 billion yuan increase in the refinancing limit for private enterprises.
Public data shows that China’s economic growth rate in the second quarter was 4.3%, hitting a new low in three and a half years. The official Purchasing Managers’ Index (PMI) for manufacturing in July and August contracted for two consecutive months, with retail sales in August growing by 0.4% year-on-year, lower than the 0.6% in July, and urban investment accelerating its decline. In August, profits of industrial enterprises above a designated scale in China grew by 4.2% year-on-year, lower than the 11.2% in July, marking the fourth consecutive month of slowdown and the lowest level since November last year.
Bloomberg reports that amidst ongoing weak domestic demand, the second-quarter economic growth rate at 4.3%, the third-quarter growth rate may fall below the lower limit of the government’s full-year target range of 4.5%-5%.
Lynn Song, Chief Economist for Greater China at ING Financial Group, stated that Beijing may introduce more policy support to achieve short-term and long-term growth goals. The magnitude of policy efforts to rescue the property market, employment, and wages will be crucial for observation.