China Real Estate: Easing Policy Measures Insufficient for a Sharp Turnaround

Key takeaways:

• On the back of policy easing by the Chinese government as well as the ease of access to debt and the lockdown being lifted, the real estate sector may witness recovery in the mid-term. 
• Exchanging the bonds or pushing maturity dates ahead would provide short-term relief but would not resolve the credit crisis. We may see more defaults by property developers due to increased pressure on bond maturities and the difficulty to free up cash to settle their outstanding debts amid the property sector crisis.
• Boycotting mortgage payments on stalled projects remains a serious concern as it could lead to a surge in the default rate of banks that are exposed to such assets, thereby bringing instability to the financial sector.