China’s Property Rescue to Deliver Modest GDP Boost, Survey Shows

China’s most forceful attempt to shore up its beleaguered property market is expected to improve growth prospects modestly this year, according to economists surveyed by Bloomberg.

Seven out of 12 respondents to a flash survey said the rescue package unveiled May 17 will give a boost of between 0.1 and 0.3 percentage point to gross domestic product this year. Four economists expect a contribution of less than 0.1 percentage point, while one saw no impact from the policies. The median forecast for growth in 2024 edged up to 4.9%.

The support package announced by Beijing includes lower down-payment requirements for homebuyers and 300 billion yuan ($42 billion) of central bank funding to help local authorities buy excess inventory from developers. Those properties would then be converted into affordable housing.

“The specifics of the rescue package amount to rather measured support,” said Erica Tay, an economist at Maybank Investment Banking Group. “But this might be the first salvo, with more to come.”

While the efforts signaled a renewed commitment to tackle one of the biggest drags on the Chinese economy, the funding announced was only a fraction of what some analysts say is needed to address the supply-demand mismatch in housing.

Read more: China’s Housing Rescue Too Small to End Crisis, Analysts Say

“Even if prices establish a trough this year, there is still a high level of housing inventories which will take time to work through,” said Lynn Song, Greater China chief economist at ING Bank. “Before these inventories are normalized, it is difficult to expect a significant turnaround in real estate investment and construction activity, which is the primary direct impact on GDP growth.”

Economists expect the People’s Bank of China to cut the reserve requirement ratio for banks by 25 basis before the end of June, a move that would release cash for loans and investment. But they don’t expect the central bank to cut its one-year policy rate before the third quarter. Last month’s survey had predicted a cut by the end of June.

WATCH: Inside China’s Property Crisis

The Communist Party’s 24-man Politburo has called for the “flexible use” of policy tools including interest rates and the RRR to lower funding costs , boosting expectations for more monetary support to meet the growth target of around 5% economic growth this year.

Other key highlights from the survey:

• Economists slightly raised GDP growth outlook, expecting 4.9% this year and 4.5% in 2025
• Consumer price inflation outlook this year raised to 0.7% from 0.6% in prior survey
• Analysts expect the central bank to hold steady the rate on its one-year medium term lending facility this quarter, compared with an earlier forecast of a 10 basis-point reduction