China’s property market faces uncertain future despite historic rate cuts

The lower rates for housing provident fund loans are part of a broader effort to revive buyer interest and push forward stalled projects

The impact of China’s latest measures aimed at boosting property market sentiment remains to be seen, as analysts cautioned that more needs to be done to revive buyer confidence and address structural weakness in the sector.

The People’s Bank of China (PBOC), the China Securities Regulatory Commission, and the National Financial Regulatory Administration on May 7 unveiled 10 major monetary measures, one of which was a cut in interest rates on housing provident fund loans.

The PBOC announced a 25-point cut in the benchmark rate for first-home buyers, bringing the five-year rate down to a historic low of 2.6 per cent. The move was quickly echoed across the country’s biggest cities.

Authorities in Beijing, Shanghai, Guangzhou and Shenzhen officially implemented the new rates on May 8. In all four cities, the rate for first-home provident fund loans over five years was adjusted to 2.6 per cent, while the rate for second homes was lowered to 3.075 per cent. Shorter-term loans saw similar reductions, while for existing loans, the new rates will take effect from January 2026.

“These measures will help reduce the financial burden of homebuyers and ensure project delivery, which is critical to restoring homebuyers’ confidence,” said Raymond Cheng, a managing director at CGS International Securities in Hong Kong. “It will be even better if policymakers set specific goals for buying unsold units from distressed developers.”

The latest rate cuts are part of a broader effort to revive buyer interest and push forward stalled residential projects. The PBOC said that about 6.7 trillion yuan (US$926 billion) in loans had been approved by banks for so-called “whitelist” housing projects, covering nearly 16 million units. These projects, vetted at the local level, were expected to receive prioritised funding to ensure timely completion, it added.

China’s property market faces uncertain future despite historic rate cuts

China’s property market faces uncertainty despite historic rate cuts on housing provident fund loans. The People’s Bank of China (PBOC) and other regulators implemented a 25-point rate cut for first-home buyers, lowering the five-year rate to 2.6% and second-home rates to 3.075%. The measures aim to revive buyer confidence and address stalled projects, with 6.7 trillion yuan in loans approved for prioritized housing projects.