Stimulus at the highest level! Real estate stocks are swinging violently: limit up just yesterday, limit down today, and then limit up again!
On September 30, real estate stocks fell across the board, with the sector index dropping more than 4%. Tefa Service plunged nearly 15% at one point, while 5i5j, Shenzhen Property A, and World Union fell to their limit down, and China Vanke Co.,Ltd. (ASX: 000002) also hit limit down at one point. What makes this interesting is that Shenzhen Property A and China Vanke Co.,Ltd. (ASX: 000002) had just hit limit up yesterday.
However, the real estate sector rebounded during the trading session. As of press time, Zhongtian Service and Lujiazui hit limit up, Shenzhen Property A even staged a "floor-to-ceiling board" reversal, and both 5i5j and China Vanke Co.,Ltd. (ASX: 000002), which had plummeted straight to limit down at the open, turned positive, with China Vanke Co.,Ltd. (ASX: 000002) gaining nearly 4%.
Just yesterday, the Ministry of Finance, the People's Bank of China, and the National Financial Regulatory Administration jointly issued a notice confirming that starting October 1, 2026, an interest subsidy policy for residential home purchase loans will be implemented, with a provisional implementation period of one year. This marks the first time the central government has provided interest subsidies for commercial individual housing loans. For example, for a long-term 1 million yuan commercial individual housing loan, considering that most mortgages pay interest and principal on a monthly basis with the loan balance decreasing month by month, the subsidy policy could help borrowers reduce cumulative interest payments by nearly 50,000 yuan at most.
Today, some banks have already announced implementation of the residential home purchase loan interest subsidy policy. Industrial and Commercial Bank of China announced today that it is earnestly implementing the requirements of the "Notice on Implementing the Interest Subsidy Policy for Residential Home Purchase Loans" and will provide interest subsidy services to eligible customers starting October 1, 2026, in accordance with the subsidy standards. The bank will adopt a "no application required, automatic benefit" approach, meaning that when collecting monthly interest, the corresponding subsidy amount will be automatically deducted from each installment payment, and customers will be promptly notified via text message and other means. ICBC reminds customers that it does not charge any fees in the process of handling the commercial individual housing loan interest subsidy business.
Real estate stocks attract financing investors
According to incomplete statistics, there are currently 96 stocks in the A-share real estate industry, with a combined total market value of approximately 1.05 trillion yuan. Poly Developments leads with a market value of 69.9 billion yuan, China Merchants Shekou ranks second at 68.4 billion yuan, followed by China Vanke Co.,Ltd. (ASX: 000002) at 48.7 billion yuan, while Lujiazui, Xiandao Jidian, and Zhangjiang Hi-Tech all have market values exceeding 40 billion yuan.
Since the beginning of the year, the real estate sector has generally trended weakly, with 24 stocks rising and 72 stocks falling. Xiandao Jidian surged 176% to lead the gains, Sunshine Shares jumped 173% to rank second, Xiangjiang Holdings rose 134%, and Beijing Investment Development, Rongfeng Holdings, and Jingneng Real Estate all gained more than 50%. On the declining side, Hainan Airport, Beijing Capital Development, ST Yincheng, and many others fell by more than 30%.
Over the past week, the sector's trend has strengthened, with 62 stocks rising, 31 falling, and 3 remaining flat. *ST Huaxing rose 22% to lead, Shenzhen Property A gained 16%, Tefa Service rose 15%, and Xiandao Jidian, Binjiang Group, 5i5j, China Vanke Co.,Ltd. (ASX: 000002) and many others all gained more than 7%. On the declining side, Xiangjiang Holdings, Wantong Development, and *ST Shuyuan all fell more than 8%.
How significant is the impact of this major residential home purchase loan policy?
Earlier, on September 28, the State Council executive meeting was held to study work related to strengthening the effectiveness of macro policies and promoting effective investment, and made a series of new deployments. The meeting required the introduction of a batch of pragmatic and effective incremental policies and optimization of fiscal expenditure arrangements.
The China Index Academy noted that this policy is a concrete reflection of implementing the work deployment of the State Council executive meeting. It is the first time the central government has provided interest subsidies for individual housing loans. By using fiscal "interest rate gap subsidies," without touching loan contract rates or compressing banks' net interest margins, fiscal funds are directed toward genuine self-occupation demand, directly reducing the actual funding cost for eligible first-time homebuyers by about 1 percentage point, effectively easing the monthly payment pressure on homebuyers.
The loan interest subsidy policy aims to meet "rigid housing demand from residents," with a focus on supporting ordinary families purchasing new small-to-medium-sized, lower-priced housing. The single household's purchased housing must not exceed 120 square meters in floor area, and the purchase price must not exceed 1.5 million yuan.
The director of the 58 Anjuke Research Institute analyzed that the core beneficiary group is concentrated in small and medium-sized third- and fourth-tier cities, county-level areas, and satellite cities of urban clusters. In these cities, the total price of mainstream 120-square-meter units generally ranges from 400,000 to 1.2 million yuan, almost entirely falling within the policy range, and housing priced under 1.5 million yuan is the absolute mainstay of market transactions. The main beneficiaries are ordinary second- and third-tier cities. In central and western regions and northeastern provincial capitals, mainstream rigid-demand properties are concentrated in the 100,000 to 2 million yuan range, with a large number of rigid-demand properties falling within the policy coverage. Partial beneficiaries include peripheral areas of strong second-tier cities. In the core areas of strong second-tier cities such as Chengdu, Wuhan, Hangzhou, Nanjing, and Suzhou, total prices generally exceed 2 million yuan, and policy coverage is limited, but small-to-medium-sized units in far-suburban rigid-demand areas still fall within the range.
"The beneficiary scope is basically located in peripheral areas of hotspot cities, small-to-medium-sized units, and medium-to-low-priced new or second-hand homes, which aligns with the rigid-demand group. New homes in far suburbs of first-tier cities and older housing in central areas will also benefit," said Li Yujia, chief researcher at the Housing Policy Research Center of the Guangdong Provincial Urban and Rural Planning Institute.
Yan Yuejin, deputy director of the Shanghai E-House Real Estate Research Institute, said that based on the current price adjustments, housing prices in many areas have already adjusted, and some cost-effective second-hand homes and small-unit second-hand homes have total prices basically at this level (under 1.5 million yuan). For large cities, this will help activate these second-hand homes and drive more active transactions.
In addition, Li Yujia emphasized that a 1 percentage point interest subsidy brings the mortgage rate down to 2%, which is basically equivalent to the risk-free interest rate. The opportunity cost of borrowing decreases, and residents' willingness to use leverage will rise.
However, Zhang Bo also pointed out that since the interest subsidy policy only covers first homes, is only 1 percentage point, lasts a maximum of 5 years, and reduces the burden by less than 50,000 yuan per household at most, improvement-oriented families in first- and second-tier cities will barely feel it. In the short to medium term, it will indeed drive marginal improvement in the destocking of rigid-demand properties in the 1.5 million yuan total price range and repair market expectations, but a single policy can hardly change the market landscape.
(The views in this article are for reference only and do not constitute investment advice. Investing involves risks, and caution is advised when entering the market!)
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