The “three arrows” – where are they leading China’s property sector?
The “three arrows” framework was launched in November 2022 to unblock financing channels for China’s domestic property development sector that experienced a sharp increase in defaults as a result of a decline in sales, highly regulated presales proceeds and stifled external financing under the government’s tightened policies. The scheme lent a hand to developers by facilitating their access to bank credit, and bond and equity markets.
Market performance after the “three arrows”
Following the policy moves, China property USD bond prices soared from a deeply depressed level, indicating a positive turn in sentiment towards the property sector. Onshore issuance volume was shored up by end-2022, narrowing the financing gap to its smallest in the year. However, the housing market has reacted slowly to the government’s moves, with individual home buyers still wary. Housing prices in major cities have just stopped declining, but not enough to regain home buyers’ interest.
Contracted sales slowed their y/y pace of decline but are not strong enough yet to buoy the land market. The easing financing conditions offer little incentive for developers to show up in the land market, as homebuilders still face debt repayment pressure.
Acuity’s value proposition
Global organisations and research houses leverage our industry- and country-specific expertise to make sound strategic decisions. We set up dedicated teams of analysts and macro-level associates to support our clients in areas such as macroeconomic research, industry profiling, financial analysis, econometric modelling, thematic research, building databases and providing regular sector coverage. Each output is customised, based on the client’s requirement, and made available for their exclusive use. This ensures our clients a unique, sustainable edge.