Chinese authorities have unveiled sweeping measures to rescue the struggling property sector, as regulators seek to offset years of harsh pandemic curbs and a real estate crackdown that have stalled the world's No. 2 economy.
The banking regulator and central bank on Friday issued a 16-point set of internal directives to promote the "stable and healthy development" of the industry, which were reported by Chinese state media on Monday.
The measures include credit support for debt-laden housing developers, financial support to ensure the completion and handover of projects to homeowners, and assistance for deferred-payment loans for homebuyers.
That came on the same day the National Health Commission (NHC) issued 20 rules for "optimizing" Beijing's zero-COVID-19 policy, where certain restrictions were relaxed to limit its social and economic impact.
"We view this as the most crucial pivot since Beijing significantly tightened financing of the property sector," wrote Ting Lu, chief China economist at Nomura, in a note.
"We believe these measures demonstrate that Beijing is willing to reverse most of its financial tightening measures."
Hong Kong stocks surged over 3% Monday, extending Friday's over 7% rally after the measures were unveiled.
Beijing imposed widespread lending curbs on property developers in 2020, which exacerbated their liquidity issues and caused several of the largest to default on bond payments.
The knock-on effects on the massive real estate sector were severe, with cash-strapped developer Evergrande – China's largest – and others failing to compete for projects, sparking mortgage boycotts and protests from homebuyers.
The measures emphasized "guaranteeing the handover of buildings" and ordered development banks to provide "special loans" for the purpose, according to a copy circulating online.
The document ordered financial institutions to treat state-owned and private real estate enterprises equally, as well as "actively cooperating with distressed real estate enterprises in risk management."
The measures also included "extending the transition period arrangements... of real estate loans" for distressed developers, and support for "high-quality real estate enterprises to issue bond financing."
"The plan includes financial stability measures that aim to prevent massive defaults and hence provide a 'soft landing,'" ANZ analysts wrote in a note.
But analysts cautioned that these changes – alongside the limited loosening of zero-COVID-19 measures – would not cause an immediate recovery for the ailing sector.
"While not many are expecting a financial crisis caused by the current property downturn, the mainstream view is that the property sector would stay weaker for longer. Therefore, the worst is far from over for developers," wrote Macquarie economist Larry Hu in a note.
New home prices have been falling for more than a year, while demand is struggling to pick up owing to ongoing strict pandemic controls that have dampened consumer confidence.