Chinese property stocks rallied on Tuesday after top financial regulators vowed a range of monetary easing measures to provide some relief for millions of families and boost a recovery in the real estate market.

During a high-level press conference Tuesday morning, People&rsquo s Bank of China Gov. Pan Gongsheng announced that Beijing would reduce the interest rates on existing individual mortgages by an average of 0.5 percentage points, and the lower down-payment ratio for second homes purchases to 15% from 25%.

It&rsquo s the first time that down payment levels for first and second homes are unified, and the lower rate is expected by the PBOC to reduce household interest payments on mortgages by an average of 150 billion yuan a year ($21.25 billion).

Hang Seng Mainland Properties Index surged as much as 5% when Hong Kong markets opened shortly after the announcement was made.

Hong Kong-listed shares of real estate developers like  China Resources Land,  Longfor Group Holdings  and  China Overseas Land & Investment  were some of the biggest movers on the Hang Seng index, gaining as much as 4.49%, 4.57% and 5.41%, respectively.

Chinese policymakers have been ramping up support to reduce household&rsquo s financial burden and shore up the troubled real estate sector.

Previous measures have done little to spur a meaningful recovery, with  property-related investment falling  more than 10% in the first eight months this year, from a year ago.

The central bank will also offer guidance for commercial banks to improve pricing mechanisms for mortgage loans, Pan said at the briefing, where he also announced that that China will cut the amount of cash banks need to have in hand, known  as the reserve requirement ratio or RRR, by 50 basis points.

The impacts from the new measures are likely to be limited as &ldquo rate cuts on existing loans would not spur demands for new homes, and might slow down PBOC&rsquo s pace of further lowering the loan prime rates,&rdquo William Wu, an analyst at Daiwa Capital Markets, said in an email, according to CNBC&rsquo s translation of the Chinese.

Bruce Pang, chief economist and head of research for Greater China at JLL, an investment management firm, predicted that the housing market will still take time to bottom out.

&ldquo It is necessary and urgent to launch supportive measures on all fronts and ASAP,&rdquo Pang said, but authorities will also need to provide &ldquo effective and efficient support to developers to boost property investment and construction activities.&rdquo

Bloomberg  reported last month, citing people familiar with the matter, that China was mulling a plan to allow homeowners to renegotiate terms with their current lenders before January next year. Homeowners could also be allowed to refinance with a different bank for the first time in years, the outlet reported.

Loss comes despite revenue increasing 34.8% to 20 billion yuan

 

REAL estate developer Yanlord Land Group reversed into the red with a loss of 486 million yuan (S$89.3 million) for the six months ended Jun 30, compared to net profit of 1.1 billion yuan in the year-ago period.

 

This was due to a write down to net realisable value of completed properties for sale and properties under development for sale of 729.6 million yuan, as well as an increase in net impairment losses on financial assets amounting to 368.6 million yuan, said the group in a bourse filing on Wednesday (Aug 14).

 

Loss per share for the period was 25.16 fen, compared to an earnings per share of 56.7 fen a year ago.

 

The loss was despite revenue increasing 34.8 per cent to 20 billion yuan, from 14.8 billion yuan previously. This was attributed to an increase in the average selling price (ASP) per square metre, as well as gross floor area delivered to customers.

 

The higher ASP achieved by the group in H1 FY2024 was mainly attributable to the change in composition of product mix delivered during the reporting period, said the group.

 

The group said it delivered several projects, including Poetic Villa in Shanghai, Star Century in Tianjin and Yanlord on the Park in Shenyang. These projects collectively accounted for 90.4 per cent of the group&rsquo s revenue on sales of properties in H1 FY2024.

 

Other contributors to the group&rsquo s revenue included rental income from investment properties, income from hotel operations, and revenue from property management services, as well as other non-property business operations and ancillary services.

 

The group&rsquo s gross profit decreased by 37 per cent to 2.6 billion yuan in H1 FY2024, from 4.2 billion yuan. The decrease was primarily due to the change in the composition of product mix delivered and write-down of completed properties for sale and properties under development for sale in the first half.

 

As at Jun 30, the group&rsquo s total debt decreased by 10.1 per cent to 30.1 billion yuan. It has cash and cash equivalents of 10.6 billion yuan as of June, down from 13 billion yuan as at Dec 31, 2023.

 

Zhong Sheng Jian, Yanlord Land chair and chief executive, said the Chinese government&rsquo s stimulus measures have had a positive impact on real estate in some cities.

 

&ldquo The group will closely monitor market trends and adjust its strategies promptly, while maintaining financial health, to maximise and safeguard shareholder value,&rdquo he said.