China Weighs Mortgage and Transaction Relief to Shore Up Property Market

China is evaluating targeted stimulus measures—including mortgage subsidies and lower transaction costs—to support its weakening real estate sector, a key source of household wealth and local government revenue. The move comes amid renewed slumps in home prices and investment, prompting policymakers to consider new steps ahead.

What We Know

On November 20, 2025, Semafor reported Beijing is weighing a package of stimulus options to arrest the prolonged slump in the real estate sector. Proposals include subsidies on mortgages and cuts to costs associated with home transactions.

Recent official data underline the urgency. In October, new home prices fell 0.5% month‑on‑month—the steepest drop in a year—and 2.2% year‑on‑year, signaling persistent softness in demand despite previous interventions. Property investment and sales continued to slide, especially in smaller cities. Financial indicators also flagged: fixed-asset investment dropped 1.7% year‑on‑year in October—the worst since mid‑2020—while private sector investment declined significantly and housing development investment plunged around 14–15% across year-to-date figures.

Monetary policy has remained steady. The People’s Bank of China is expected to keep benchmark lending rates unchanged for a sixth straight month, even as mortgage and business loan rates have continued to ease, pointing to a shift toward more selective, fiscal-led stimulus.

What It Means

The real estate sector is central to China’s economic stability. Its prolonged downturn threatens consumption, local government finances, and broader investor confidence. Introducing mortgage subsidies and transaction cost relief would mark a pivot from earlier restraint toward proactive support, with a greater risk appetite in fiscal policy.

Given monetary easing has reached its limits amid cautious demand for credit, the focus on fiscal tools reflects a strategic recalibration. The proposed measures aim to shore up demand, particularly for first‑time buyers, and inject liquidity back into the market—steps that may also help ease property developers’ funding constraints.

The Backstory

China’s property sector has struggled since the 2021 downturn, eroding its share of GDP from over 14% in 2021 to near 13% in 2024. Local governments have suffered as land sale revenues—a major fiscal source—fell sharply. Earlier policy interventions in 2024 offered limited relief; 2025 data show no large-scale fresh stimulus has been deployed.

What’s Next

If home prices continue to decline and investment remains weak, expectation for broader government intervention will grow. Policymakers are likely to monitor the effectiveness of targeted relief and consider additional measures, possibly scaling support depending on market response and housing confidence metrics.