[Environmental Protection in Northern China Affected Galvanizing Operating Rates]: This week, the operating rate of the galvanizing industry was 58.75, down 0.13 percentage points WoW. Raw material side, zinc prices fluctuated at highs this week, and galvanising enterprises mainly digested inventories, but with only small volumes of earlier price-fixed purchases and long-term contracts, zinc ingot inventories at galvanising enterprises edged down. The operating rate declined this week, mainly due to environmental protection-driven production restrictions in some northern regions, which affected operations.

SMM News: Following our previous analysis of the transportation and wind power sectors, this installment shifts focus to the critical demand drivers in the consumer and construction domains: White Goods , Consumer Electronics , and Real Estate-related applications (Elevators and Power Tools). While these sectors individually consume less magnetic material per unit compared to New Energy Vehicles (NEVs), their sheer aggregate volume makes them indispensable pillars of the Neodymium-Praseodymium (Pr-Nd) market. However, data from early 2026 reveals a troubling trend of stagnation and structural contraction across these traditional strongholds. I. White Goods: The Dual Pressure of Production Slumps and Material Substitution In the white goods sector, Neodymium-Iron-Boron (NdFeB) magnets are primarily utilized in two key applications: compressors for inverter air conditioners and motors for drum and impeller washing machines . 1. Air Conditioners: A Sharp Contraction in Output and Dosage According to data from the National Bureau of Statistics (NBS), China’s cumulative air conditioner production for January-February 2026 stood at 40.118 million units , a staggering 35% year-on-year (YoY) decline compared to the 61.921 million units produced in the same period of 2025. (Reason: This drastic drop is attributed to a combination of factors: firstly, an unusually mild winter across major consumption regions significantly dampened heating demand, leading to a destocking cycle among distributors. Secondly, the real estate sector’s continued downturn has severely curtailed new housing completions, directly reducing the installation of centralized and split AC systems. Lastly, high inventory levels carried over from 2025 forced manufacturers to aggressively cut production schedules in Q1 2026 to avoid capital lock-up.) Looking at the full year, SMM forecasts a marginal growth of 0.96% for 2026, with total annual production projected at 271.095 million units . (Reason: The near-flat growth outlook reflects a mature market saturation where replacement demand, rather than new installations, drives volume. While export markets offer some resilience against domestic weakness, rising trade barriers and logistical costs in key regions like Europe and North America are expected to cap significant expansion.) Applying SMM’s calculation model: Inverter Penetration: 99% NdFeB Motor Penetration: 92% Specific Consumption: Assumed at 100g/unit for 2026. Based on these parameters, the total NdFeB consumption for the air conditioner sector in 2026 is estimated at 24,691 tons , representing a 23% decrease from the 29,163 tons consumed in 2025. The core driver of this decline is twofold: first, the persistently high prices of Pr-Nd since the second half of 2025 have accelerated the industry’s cost-reduction initiatives. Second, there is a clear technological shift towards minimizing rare earth usage. The average single-unit dosage has dropped from 120g/unit in 2025 to 100g/unit in 2026 , as manufacturers optimize motor designs and, in some lower-end models, substitute with ferrite magnets or induction motor technologies where efficiency standards allow. 2. Washing Machines: A Slow Erosion of Demand For January-February 2026, China’s cumulative washing machine production was 18.58 million units , a slight 0.3% YoY decline from the 18.51 million units in the same period of 2025. (Reason: The stability in production volumes masks underlying weakness. The slight dip is primarily due to weak consumer confidence impacting discretionary spending on home appliance upgrades. Furthermore, the export market for washing machines has faced headwinds from sluggish global economic growth and intensified competition from Southeast Asian manufacturing hubs, offsetting modest domestic recovery efforts.) SMM projects a full-year growth rate of 3.1% for 2026. (Reason: This modest recovery is underpinned by government-led "trade-in" subsidy policies aimed at boosting domestic consumption of energy-efficient appliances. Additionally, product innovation in the high-end segment, such as washer-dryer combos and smart features, is expected to stimulate some replacement demand, though the overall ceiling remains low.) Demand Calculation Logic: Drum Washer Penetration: 63% (High-end, 98% use NdFeB) Impeller Washer Penetration: 28% (Mid-range, 50% use NdFeB) Specific Consumption: 290g/unit for drum washers; 240g/unit for impeller washers. Under this model, the total NdFeB demand for washing machines in 2026 is estimated at 27,204.52 tons , a 0.2% decrease from 27,262 tons in 2025. The sector is experiencing a slow but steady erosion of demand. While high-end drum washers rely heavily on efficient NdFeB motors to meet stringent energy labels, the volatility of rare earth prices is prompting manufacturers to cautiously explore alternative motor designs or reduce magnet grades in non-critical applications. Consequently, the industry has adopted a strategy of gradual reduction rather than abrupt substitution, balancing performance requirements with cost control. Outlook: The trajectory for white goods in 2026 is undeniably pessimistic. Both production volumes and technical intensity (dosage per unit) are trending downward, creating a double drag on Pr-Nd demand. II. Consumer Electronics: Volume Resilience vs. Intensity Decline The consumer electronics sector, modeled by SMM, comprises four main segments: Mobile Phones , Tablets , Desktops/Laptops , and Smartwatches . These devices utilize NdFeB primarily for acoustic components (speakers/receivers) and haptic feedback motors, with emerging uses in magnetic charging interfaces. The specific consumption is generally low, ranging from 2-5g/unit , except for desktops which average 15g/unit . Market Performance (Jan-Feb 2026): Mobile Phones: 220 million units (+6.8% YoY). Micro-computer Equipment: 41.956 million units (-31% YoY). Breakdown: 21% Tablets, 27% Desktops, 52% Laptops. Smartwatches: 8.196 million units (+7.8% YoY). (Reason: The divergence in performance is stark. Mobile phone growth is driven by the global rollout of AI-enabled handsets and the replacement cycle for 5G devices, particularly in emerging markets. Conversely, the sharp collapse in micro-computer equipment reflects the post-pandemic normalization of demand; the massive stockpiling of devices during 2020-2022 has led to a prolonged digestion phase. Additionally, extended device lifespans due to improved hardware durability have further suppressed replacement rates for PCs and tablets.) 2026 Full-Year Forecast: SMM anticipates a 1% growth for mobile phones and micro-computers combined, and a 5% growth for smartwatches. (Reason: The muted outlook for computing devices stems from persistent macroeconomic uncertainty and corporate IT budget tightening. For smartwatches, growth is fueled by increasing health-monitoring capabilities and deeper ecosystem integration with smartphones. However, the entire sector faces a cloud of uncertainty due to escalating geopolitical tensions affecting supply chains and rising memory chip prices, which may force OEMs to revise production targets downward later in the year.) Demand Estimation: Mobile Phones: 3,109.8 tons Micro-computers: 2,018.9 tons Smartwatches: 125.06 tons Total 2026 Demand: 5,253.76 tons , a 3% decline from 5,421.19 tons in 2025. The primary driver for this decline is the continuous, albeit slow, reduction in specific consumption. As miniaturization advances and alternative magnetic materials improve, the amount of NdFeB required per device is shrinking. Despite the relatively low single-unit dosage, the massive scale of the consumer electronics industry ensures it remains a significant consumer of NdFeB. Moreover, this sector is characterized by highly standardized supply chains, where major OEMs maintain binding agreements with certified magnet suppliers, making demand relatively stable but resistant to price-driven spikes. III. Real Estate Related: Elevators and Power Tools The final segment covers industries tightly coupled with the real estate cycle: Elevators and Handheld Power Tools . 1. Elevators: Policy Support vs. Structural Headwinds In January-February 2026, elevator production reached 150,000 units , a 7.1% YoY increase . (Reason: This short-term surge is largely attributable to the acceleration of projects that were delayed in late 2025, as developers rushed to meet pre-delivery deadlines before stricter regulatory inspections took effect. Additionally, government mandates for retrofitting old residential communities with elevators in urban renewal zones provided a temporary boost to order books.) However, SMM forecasts a full-year contraction of -3% for 2026. (Reason: The long-term outlook is grim due to the fundamental slowdown in new residential construction starts, which remain at multi-year lows. The debt crisis plaguing major property developers continues to stall new project launches, directly impacting the demand for new elevator installations. While the retrofit market offers some support, it is insufficient to offset the collapse in new building commissions.) Calculation: Energy-saving Elevator Penetration: 90% Specific Consumption: 6 kg/unit (for energy-saving models). Total 2026 Demand: 7,222.6 tons , a 1.3% increase from 7,125.3 tons in 2025. (Reason for Growth: The slight increase in total tonnage despite falling production volumes is entirely driven by the rising penetration of energy-saving elevators. Stricter national energy efficiency standards (GB standards) are forcing manufacturers to adopt permanent magnet synchronous motors (PMSM) over traditional asynchronous motors, thereby increasing the average NdFeB dosage per unit even as the total number of units declines.) 2. Handheld Power Tools: A Direct Casualty of Property Slump Production of handheld power tools in Jan-Feb 2026 was 29.566 million units , down 0.24% YoY . SMM projects a -3% decline for the full year 2026. (Reason: The downturn is inextricably linked to the stagnation in the global and domestic real estate markets. Reduced renovation activities and a slowdown in infrastructure projects have dampened demand for professional-grade tools. Furthermore, high inventory levels in distribution channels across North America and Europe, resulting from over-ordering in 2024, have led to a prolonged period of destocking.) Definition & Scope: According to the National Bureau of Statistics, handheld electric tools refer to portable motor-driven tools operated by hand, including electric drills, grinders, sanders, saws, and screwdrivers . These products are highly sensitive to housing turnover and renovation rates. Demand Calculation: NdFeB Penetration: 60% Specific Consumption: 80g/unit Total 2026 Demand: 9,134 tons , a sharp 13.4% drop from 10,548 tons in 2025. The significant contraction in this sector underscores the deep correlation between the property market and industrial metal demand. As the real estate sector remains in a prolonged adjustment phase, the downstream demand for power tools—and consequently NdFeB—faces sustained pressure. Conclusion The analysis of white goods, consumer electronics, and real estate-related sectors paints a picture of structural weakness for 2026. While niche policy drivers (like energy-saving elevator mandates) provide isolated pockets of growth, the overarching trends are defined by production saturation, inventory destocking, and aggressive material substitution . The combined effect of lower production volumes and reduced single-unit dosages creates a formidable headwind for Pr-Nd prices. In the final installment of this series, we will pivot to the future: examining the burgeoning demand from Low-Altitude Economy (eVTOLs), Robotics (Industrial and Service), and the relentless expansion of Electric Two-Wheelers . These emerging sectors may hold the key to offsetting the declines observed in traditional industries and reshaping the long-term demand curve for rare earth magnets.

[SMM Silicone Weekly Review: Downstream Procurement Sentiment in the Silicone Market Remained Cautious, and New Order Transactions Were Relatively Weak] After completing the price increase last week, quoted prices generally remained stable this week, but actual market transactions were relatively weak. Cost side, affected by geopolitical developments, raw material methanol prices held up well, which also provided some support for silicone DMC prices. However, subsequent impacts and changes still require close attention to the extent of raw material price fluctuations and the duration of their effects.

Quzhou City, Zhejiang Province, has introduced a robust home purchase subsidy policy. Recently, departments including the Quzhou City Housing and Urban-Rural Development Bureau jointly issued a notice, introducing multiple measures to stabilize the real estate market, such as offering group purchase subsidies for home purchases, implementing improved home purchase subsidies for families with multiple children, deepening the integrated use of housing vouchers across the city, accelerating the improvement of the housing security system, and launching a campaign to distribute consumption vouchers for home purchases in the Smart New City. "Quzhou's new real estate policies released in mid-year mainly focus on home purchase subsidies, aiming to support housing consumption," Lu Qilin, Research Director of the 58 Anjuke Research Institute, told reporters. According to the notice, individuals who subscribe to newly-built commercial residential properties in the urban area of Quzhou City (projects that have obtained their first pre-sale permits since 2021) during the 2025 real estate consumption promotion campaign will be reported by participating real estate enterprises to the corresponding housing transaction departments. The housing transaction departments in the urban area will group every 10 successful purchases (groups) and provide a group purchase subsidy of 20,000 yuan per unit to homebuyers. The group purchase subsidy is limited to 300 units and will be available for two months, or until the quota is exhausted. In terms of implementing improved home purchase subsidies for families with multiple children, starting from June 20, 2025, families with multiple children purchasing newly-built commercial residential properties in the urban area of Quzhou City (projects that have obtained their first pre-sale permits since 2021) will be eligible for improved home purchase subsidies. Specifically, families with two children who sign a "Zhejiang Province Commercial Housing Sales Contract" for a residential property with a floor area of 100 m² or more can apply for an 80,000-yuan subsidy. Families with three children who sign a "Zhejiang Province Commercial Housing Sales Contract" for a residential property with a floor area of 120 m² or more can apply for a 200,000-yuan subsidy. Subsidies will be issued in the form of housing vouchers, which can be used in conjunction with other types of housing vouchers. This policy will be implemented on a trial basis for one year. In addition, the Smart New City Management Committee, in collaboration with some real estate enterprises within its jurisdiction, has jointly launched home purchase consumption vouchers. Individuals purchasing newly-built commercial residential properties in projects participating in the consumption promotion campaign will receive a home purchase consumption voucher subsidy of 600 yuan/m² based on the floor area of the residential property with ownership rights specified in the "Zhejiang Province Commercial Housing Sales Contract" (the subsidy will be calculated based on the floor area corresponding to the additional amount paid after deducting the value of various housing vouchers from the total housing price; for trade-in scenarios, the excess amount can be subsidized after complying with the policy requirements of the implementing entity), with a maximum subsidy of 100,000 yuan per unit. This subsidy campaign will be conducted simultaneously with the 2025 city-county coordinated real estate consumption promotion campaign, and there will be no total limit on the distribution of consumption vouchers. Lu Qilin pointed out that Quzhou's current policies differ from those previously announced in other cities and possess certain innovative and referential values. Firstly, in the latest policies, the three subsidies—group purchase subsidies, home purchase subsidies for families with multiple children, and home purchase consumption subsidies—are implemented concurrently, breaking away from the traditional "single subsidy-focused" model adopted in various regions. Second, multi-child subsidies are implemented in a tiered manner, with different amounts for second and third children, and the subsidy for third children is more generous. Third, real estate developers directly subsidize homebuyers in the form of consumption vouchers, and the subsidy amounts are not low. This differs from the common model of "relying on intermediary channels with high commissions," allowing homebuyers to directly benefit while also reducing the marketing costs of real estate developers. He further stated that Quzhou's strong support for housing consumption through subsidies may be related to changes in the local market. According to data from 58 Anjuke Research Institute, the recent interest in searching for new homes in Quzhou has pulled back YoY. "It can be seen that the local government hopes to promote the 'stabilization and recovery' of the property market through subsidies." In fact, amid the backdrop of a pullback in market enthusiasm, many regions have recently introduced home purchase subsidy measures. On June 11, Yuhang District of Hangzhou City issued new property market policies, including pilot promotion of "high-quality housing" construction, optimization of housing provident fund services, and implementation of home purchase support policies. According to the latest policies, Yuhang District encourages real estate developers to carry out various activities such as home purchase sales promotions, offering certain discounts to homebuyers. From June 10, 2025, to June 30, 2025, for projects that carry out home purchase sales promotions, a subsidy of 40,000 yuan per unit will be provided to homebuying families that purchase newly built commercial residential properties in the corresponding projects after the real estate ownership certificates for the purchased properties are obtained. The total subsidy amount is 16 million yuan, and it will be distributed on a "first-come, first-served" basis according to the online contract signing time until the funds are exhausted. Yuhang District has also extended the implementation period of special home purchase subsidies. On the basis of implementing the municipal-level high-level talent (categories A-D) home purchase subsidies, high-level talents who meet the criteria (municipal-level category E, district-level category E, and above) purchasing newly built commercial residential properties in Yuhang District will be eligible for a maximum home purchase subsidy of 200,000 yuan. The policy implementation period has been extended to December 31, 2025. In addition, Chongqing issued six policies related to housing consumption on May 30, mentioning that for newly purchased commercial residential properties (with completed online contract registration and deed tax payment) in the central urban area with a single-unit floor area of over 140 m², the district government (administrative committee) where the property is located will provide a subsidy of 0.5% of the total property price. The Hefei Housing Security and Real Estate Administration Bureau issued a notice on May 29, stating that the relevant policies on home purchase subsidies in Hefei will be extended until May 14, 2026. Industry insiders pointed out that, based on the transaction situation in May this year, there are signs of a pullback in the market, and downward pressure on housing prices has emerged during the adjustment process. Various regions need policy support to further stabilize the market. "Since Q2, some new phenomena have emerged in the market, and the pressure for the property market to stabilize and recover has increased. For example, the listing volume of second-hand homes has risen rapidly, while the decline in second-hand home prices has accelerated. Meanwhile, during the implementation of "high-quality housing" projects, some newly developed projects have had a certain impact on old planned projects and second-hand homes, making it difficult for some projects to sell. " said Li Yujia, Chief Researcher at the Guangdong Housing Policy Research Center. According to monitoring data from E-house China Research Institute, in May this year, the sales area and sales volume of commercial housing nationwide were 71 million m² and 0.71 trillion yuan, respectively. Although they increased by 10.3% and 13.1% MoM from April, they decreased by 3.3% and 6% YoY, respectively. "Looking at a longer timeframe, the monthly sales area was the lowest for the same period since 2011, and the monthly sales volume reached the lowest for the same period since 2016," said an analyst from E-house China Research Institute. Chen Wenjing, Director of Policy Research at the China Index Academy, pointed out that the State Council executive meeting on June 13 set the tone to "drive the real estate market to stabilize and recover with greater force," sending a positive signal of further policy intensification that will have a positive impact on the market. "The top leadership has clarified four key areas for policy efforts going forward: stabilizing expectations, activating demand, optimizing supply, and mitigating risks. The implementation and follow-up of these policies are expected to be crucial in promoting the market to 'stabilize and recover,'" Chen Wenjing added.

To boost market vitality, Guangzhou has taken a crucial step in optimizing its real estate policies. On June 13, Guangzhou released the "Implementation Plan for Special Actions to Boost Consumption (Draft for Public Comment)", seeking public feedback. The plan explicitly proposes to "systematically reduce consumption restrictions, optimize real estate policies, comprehensively lift purchase restrictions, sales restrictions, and price caps, and lower down payment ratios and interest rates for loans." This draft for public comment views real estate consumption as a "key link" in boosting the overall vitality of the consumer market. Industry analysts generally believe that the implementation of this series of policies will effectively stimulate Guangzhou's property market and accelerate the process of stabilizing housing prices. More critically, Zhang Bo, President of the 58 Anjuke Research Institute, stated that Guangzhou, as a first-tier city, sending a comprehensive and clear signal of policy easing, indicates an increased likelihood of further policy relaxation in first-tier cities. Clear Signal of Comprehensive Easing "This move marks Guangzhou as potentially the first first-tier city in the country to comprehensively lift the 'four restrictions'—purchase restrictions, sales restrictions, price caps, and loan restrictions," Zhang Bo told reporters. In fact, Guangzhou had already laid the groundwork for easing real estate policies. Chen Xueqiang, Research Director of the South China Branch of the China Index Academy, said in an interview with reporters that the comprehensive lifting of sales and purchase restrictions mentioned in this "Draft for Public Comment" had already been fully implemented in Guangzhou in May and September 2024, respectively. Although no official document had been previously issued regarding the lifting of price caps, the policy had already been in practice, meaning developers still needed to register prices, but the government no longer provided guidance prices. Regarding credit policies, Chen Xueqiang added that the current down payment ratios for first-time and second-time commercial loans in Guangzhou are both 15%, with the first-time commercial loan interest rate at 3% and the housing provident fund interest rate at 2.6%, which are already at relatively low levels. There is room for further reductions in the down payment ratios for housing provident fund loans in the future. From the perspective of Guangzhou's own real estate market situation, policy adjustments are also very necessary. According to Zhang Bo, based on housing price data released by the National Bureau of Statistics, Guangzhou is a first-tier city facing relatively significant downward pressure on housing prices, with both the new and second-hand housing markets remaining in a downward trend this year. Although Anjuke's online data shows that the overall second-hand listing prices stabilized in June, price declines were more pronounced in peripheral areas such as Baiyun, Panyu, Nansha, and Zengcheng. "Therefore, by comprehensively lifting purchase restrictions, sales restrictions, and price caps, and lowering down payment ratios and interest rates for loans, the aim is to eliminate administrative intervention, allow the market to return to supply and demand-driven dynamics, boost property transactions, and accelerate the stabilization of housing prices."Zhang Bo said. Chen Xueqiang also believes that the draft for public comments explicitly expands the scope of cancellation to include restrictions on resale and price caps, and emphasizes reducing down payment ratios and interest rates. This is a comprehensive confirmation of the policies already implemented, sending a strong signal of easing to the market. Several analysts have pointed out that among first-tier cities, Guangzhou has frequently taken the lead in introducing easing measures in the past, and the new policies in Guangzhou this time may continue to trigger a chain reaction, with other first-tier cities potentially following suit in relaxing their policy restrictions. Multi-dimensional Efforts to Activate Demand In addition to easing core restrictive measures, Guangzhou's current plan also deploys measures from multiple angles, aiming to activate latent demand and comprehensively meet housing consumption needs. The plan explicitly proposes to steadily advance the renovation of urban villages and old residential communities, with plans to initiate renovation of over 150 old residential communities and upgrade over 9,000 old residential elevators by 2025, achieving fixed asset investment of 100 billion yuan in urban village renovation. "Such quantitative targets demonstrate Guangzhou's emphasis on urban renewal and its determination for sustained investment," Zhang Bo analyzed. As a core supporting measure for optimizing Guangzhou's real estate policies, the renovation of old residential communities has been deeply advanced in recent years, leading the nation. Through institutional innovation, diverse participation, and precise implementation, it has achieved a positive interaction between improving people's livelihoods and urban development. Meanwhile, Yan Yuejin emphasized that urban village renovation will effectively promote the release of latent home-buying or housing demand. The plan also proposes to "advance the use of special loans to purchase existing commercial housing as resettlement housing." In fact, Guangzhou has been at the forefront nationwide in terms of special bond acquisitions and storage. Yan Yuejin believes that the mention of this in the current plan indicates that special loans will continue to play a significant role in the subsequent acquisition of existing commercial housing for resettlement purposes. Furthermore, the plan requires the continuous optimization of housing provident fund usage policies, supporting depositors in applying for individual housing loans from the housing provident fund while withdrawing funds from it to pay for home down payments, and further optimizing policy measures for rent extraction. Industry insiders believe that through the comprehensive withdrawal of restrictive policies, the continuous optimization of credit policies, as well as a stimulus policy package of supporting measures including urban village renovation, utilization of existing housing, and housing provident fund support, Guangzhou is striving to unblock the housing consumption chain and inject confidence into the market. If the policies are smoothly implemented, Guangzhou will not only become the first first-tier city to bid farewell to the era of "four restrictions" (restrictions on purchases, sales, prices, and loans), but it will also provide a reference sample for other major cities.

With the 10 basis point (BP) reduction in the loan prime rate (LPR) for loans with a maturity of over five years on May 5, mortgage rates across the country are set for new adjustments. A reporter from Cailian Press learned today from staff at the personal loan departments of several banks in Beijing that starting tomorrow, the mortgage rate for new loans in Beijing will be lowered by 10 basis points. Given that the current LPR plus or minus spread for mortgage rates remains unchanged, the interest rate for first-time homebuyers will drop to 3.05%. Industry insiders told Cailian Press that the policy floor for mortgage rates for first-time and second-home buyers has been lifted nationwide, and in many cities, the mortgage rate for first-time homebuyers has already fallen to a historic low of around 3.0%. The reduction in the LPR for loans with a maturity of over five years will help guide mortgage rates across the country to decline further, continuing to reduce the cost of home purchases for buyers. Starting tomorrow, Beijing's mortgage rate for first-time homebuyers will drop to 3.05%, hitting a new historic low "With the LPR reduction today, new loans will also be adjusted. After the adjustment, the mortgage rate for first-time homebuyers will be 3.05%, down from 3.15%," said a staff member from the personal loan department of a major bank in Beijing to Cailian Press. The rate for second-home buyers will also be lowered by 0.1%, with the rate for second homes within the Fifth Ring Road dropping from 3.55% to 3.45%. "Loans disbursed tomorrow will be at the adjusted rate, while loans disbursed today will still follow the 3.15% rate (for first-time homebuyers)," the staff member said. Another staff member from the loan department of another major bank in Beijing also stated that after the LPR adjustment, the mortgage rate for first-time homebuyers has now dropped to 3.05%, and the mortgage rate for second homes outside the Fifth Ring Road has been lowered by 0.1% to 3.25%. "New loans disbursed tomorrow will be at the new rate, while loans are generally not disbursed today," the staff member said. When mentioning that there have been adjustments to the LPR plus or minus spread for mortgage rates in some regions recently, the staff member said that no notification of adjustments to the LPR plus or minus spread has been received so far. Today, the People's Bank of China authorized the National Interbank Funding Center to announce the new LPR quotes: the one-year LPR is reported at 3.0%, down from 3.10% last month; the LPR for loans with a maturity of over five years is reported at 3.50%, down from 3.60% last month. Chen Wenjing, Director of Policy Research at the China Index Academy, told Cailian Press that the recent 0.25 percentage point reduction in the housing provident fund loan interest rate has, for some cities, released the interest rate spread between housing provident fund loans and commercial housing loans, facilitating further adjustments and optimizations to commercial housing loan interest rates. The reduction in the LPR for loans with a maturity of over five years will help guide mortgage rates across the country to decline further, continuing to reduce the cost of home purchases for buyers. For Beijing specifically, Chen Wenjing also noted that previously, the mortgage rates for first-time and second-home buyers were 3.15% (LPR-45BP) and 3.35% (outside the Fifth Ring Road, LPR-25BP)/3.55% (within the Fifth Ring Road, LPR-5BP), respectively. After this adjustment, the mortgage rates for first-time and second-home buyers in Beijing are expected to be adjusted to 3.05% (LPR-45BP) and 3.25% (outside the Fifth Ring Road, LPR-25BP)/3.45% (within the Fifth Ring Road, LPR-5BP), respectively, with the rates for first-time homebuyers and second homes outside the Fifth Ring Road both reaching historic lows. "In addition, the current LPR cut will also drive down the mortgage rate on existing home loans. After the mortgage rate repricing date, the mortgage rate on existing home loans can follow the downward adjustment, reducing the repayment pressure on residents who have already purchased homes," added Chen Wenjing. The average mortgage rate for first homes nationwide is expected to drop to the "2" range. According to statistics from the Central China Real Estate Research Institute, the weighted average interest rate for newly issued commercial individual housing loans nationwide in Q1 2025 was 3.11%, slightly fluctuating from 3.10% in Q4 2024 (around 3.33% in Q3 2024). Among them, the average mortgage rate for first homes was around 3.06%. Zhang Dawei, chief analyst at Central China Real Estate, stated that after this interest rate cut, the mortgage rate for first homes across China is expected to drop to around 2.95%. "Before the rate cut, the mortgage rates for first homes in most cities had already dropped to between 2.8% and 3%. The mortgage rates for first homes in Beijing, Shanghai, and Shenzhen were all LPR-45BP. After this rate cut, the highest rate for first homes in first-tier cities will drop to 3.05%, while other cities will see a comprehensive reduction to around 2.9," Zhang Dawei believes. Overall, Chen Wenjing stated that the recent reduction in housing provident fund loan rates and the current cut in the 5-year LPR will further reduce the cost of purchasing homes, support the release of residents' housing demand, and play a positive role in consolidating the stable situation of the real estate market. In addition, Pan Gongsheng, the governor of the central bank, previously pointed out that "based on the economic and financial operation situation and the effectiveness of various tools, the scale of tools can be expanded and the policy elements of tools can be improved." It is expected that more policies supporting the real estate market with funds will continue to be implemented in the future, such as financial policies supporting the sale of existing homes and providing supporting funds for urban renewal. Zhang Dawei stated that, according to the data, the Loan Prime Rate (LPR) has undergone multiple cuts, with a cumulative reduction of 60 basis points. This continuous rate cut aims to release more liquidity into the market, reduce corporate financing costs, and promote the development of the real economy. As an important part of the national economy, the real estate market is naturally affected by this policy. The market generally expects that there is still room for further LPR cuts in 2025, with an expected range of 40-60 basis points. Looking ahead, Wang Qing, chief macro analyst at Oriental Jincheng, told a Caixin reporter that the current cuts in the two-term LPR quotations are consistent. However, considering the need to further strengthen policies to stabilize the property market, especially after the central bank announced a 0.25 percentage point cut in the housing provident fund loan rate on May 7, which opened up space for a reduction in commercial mortgage rates for residents, the regulatory authorities may further guide the 5-year LPR quotation downward to promote a larger reduction in residential mortgage rates. This is a crucial move to alleviate the current issue of relatively high actual mortgage interest rates and continuously drive the real estate market to stop declining and stabilize. Wen Bin, the chief economist of China Minsheng Bank, believes that with the easing of Sino-US tariffs and the implementation of policies such as RRR cuts and interest rate cuts, it is expected that GDP growth in Q2 may still reach a relatively high level of around 5%, reducing the necessity and urgency for another interest rate cut in the short term, and the timing of LPR reduction will also be postponed accordingly.

On May 7, leaders from the People's Bank of China, the National Financial Regulatory Administration, and the China Securities Regulatory Commission announced a "package of financial policies to stabilize the market and expectations." Shortly thereafter, from May 10 to 11, senior delegations from China and the US issued a joint statement in Geneva, agreeing to significantly suspend or reduce tariff hikes. This move exceeded external expectations. While global capital markets returned to early-April levels amid positive news, the market also began to focus on whether countries would adjust their macro policy timelines accordingly. On May 13, a researcher from a foreign investment bank in Hong Kong told Caixin that some US Fed officials were optimistic about the economy following the easing of the Sino-US tariff war, believing that the timing for an interest rate cut could be delayed further. The market also began to focus on whether there would be changes in China's policy timeline, or at least whether there would be a possibility of a slowdown before the next round of negotiations. Caixin reporters noted that, regarding this issue, the mainstream view among mainland institutions is that the policies announced by the three ministries on May 7 are strategic moves to implement the decisions of the April Political Bureau meeting, rather than temporary measures in response to the tariff war. Therefore, it is highly likely that this round of financial policies will be gradually implemented, including the upcoming adjustment window for the May LPR next week. However, for the next round of policies, it is necessary to "wait and see." A chief analyst from a major securities firm admitted that the new US administration has been "playing by its own rules" and "setting the tone" since taking office. Will the urgency for policy implementation decline as economic expectations improve? Following the joint statement by the two countries on May 12, multiple institutions expressed cautious optimism about China's exports and economic growth. Huatai Securities' latest report suggests that, during the 90-day exemption period for reciprocal tariffs, US tariffs on China will drop to around 40%, and global tariffs will fall to 15-17%. If tariffs related to fentanyl are reduced, tariffs on China could potentially drop to 12.2%-14.7%. Huatai believes that the cooling of the US-China tariff war has driven strong overall performance in China's exports since November last year, driven by "front-loading" of exports. Considering the uncertainty of reciprocal tariffs after the 90-day "exemption period," "front-loading" is expected to continue within the 90-day window. Not only has the probability of a US recession decreased, but in the short term, the demand for front-loading exports and capacity going global is expected to boost China's exports, and the market is also expected to raise its growth expectations for China in 2025. Guo Lei, chief economist at GF Securities, believes that progress in economic and trade talks will logically lead to upward revisions in nominal growth expectations, downward revisions in narrow liquidity expectations, and an increase in risk appetite, thereby driving interest rates to rise to a certain extent. Regarding interest rate cuts, Pan Gongsheng, the governor of the People's Bank of China (PBOC), stated on May 7 that the policy interest rate would be lowered by 0.1 percentage point, meaning the 7-day reverse repo operation rate in the open market would be adjusted from the current 1.5% to 1.4%. This is expected to drive the Loan Prime Rate (LPR) to decline by approximately 0.1 percentage point in tandem. The opportunity for LPR adjustment is approaching on May 20. On May 13, macro and banking researchers from multiple institutions expressed to Caixin that more than half of the PBOC's 10 policies have been implemented. Considering that the reverse repo rate has already been adjusted, it is highly probable that the LPR in May will follow suit and be lowered. Will the pace or direction of adjustments be slightly modified, or was the policy announced on May 7 just the beginning? Regarding China's policy direction, Guo Lei believes that this round of expanding domestic demand is not a temporary measure but a strategic move. The policy directions outlined at the end-April Political Bureau meeting should continue to be implemented. Guo Lei also believes that, of course, the resilience of April's export data and the progress made in the recent China-US economic and trade talks may provide a more ample time window for policy adjustments. The pace of policy implementation may be fine-tuned based on economic conditions. On May 7, the PBOC announced a package of 10 financial policies across three categories: quantitative, pricing, and structural, including RRR cuts, interest rate cuts, and structural tools. On the same day, the National Financial Regulatory Administration also announced eight incremental policies, including optimizing real estate financing and expanding the investment scope of insurance funds. On May 13, a banking analyst from a large securities firm in Shanghai told Caixin that the implementation of some policies in this round, such as re-lending and the optimization and creation of policy tools, is expected to take a certain amount of time. If adjustments are needed in response to the latest situation, there is likely to be more flexibility in adjusting the pace of these policies. In a report released on May 13, the China Merchants Bank Research Institute believed that the positive changes in China-US tariffs exceeded expectations, which would significantly mitigate the impact on bilateral trade between China and the US. However, industries with high dependence on and large export volumes to the US may still face significant impacts on production investment and profit recovery, affecting employment and residents' income in these sectors. Targeted corporate support measures are still needed. Regarding the next steps in policy, Zhang Jingjing, the chief macroeconomist at China Merchants Securities, holds a more positive view. In her opinion, China is currently in a low-inflation environment, with the core CPI approximately 2 percentage points lower than before. The changes in the price environment provide room for further monetary policy easing. The recently released PBOC monetary policy implementation report pointed out that "with the implementation and effectiveness of policies to expand domestic demand, market demand will accelerate its release, better supporting a mild rebound in price levels." Zhang Jingjing judged that during the property market downturn, expanding and implementing domestic demand policies remain the primary driving force behind supporting the rebound in price levels. Therefore, the monetary authority still maintains a strategy of "responding calmly" to changes in the domestic and overseas economic situation. If the impact of tariffs gradually becomes apparent in May and June, it is expected that more counter-cyclical policies will be introduced to "stabilize the market and expectations". Therefore, the easing policy on May 7th is just the beginning, not the end.

The land auction activity held in Shanghai today continued the previous enthusiasm. On May 9, Shanghai held the fourth batch of land supply this year. Shanghai offered four plots of land in this auction, with a total starting price of 8.41 billion yuan and an average starting floor price of 35,482 yuan/m². A total of nine enterprises participated in the auction, including six central state-owned enterprises, two state-owned enterprises, and one Hong Kong-funded enterprise. Ultimately, all four plots were successfully sold, with two plots sold at a premium of over 20% and two at the base price, generating a total revenue of 9.709 billion yuan. Among them, the Dongwaitan plot in Yangpu District became a hot topic today. The starting bid price for this plot was 3.358 billion yuan, with a starting floor price of 63,499 yuan/m². It attracted five bidders, including China Merchants Shekou, Jinmao, China Resources Land, CNOOC, and Poly Real Estate Group. After 72 rounds of bidding, the plot was won by Poly Real Estate Group at a price of 4.241 billion yuan, with a premium rate of 26.3% and a transaction floor price of 80,199 yuan/m². Analysts stated that the fierce competition among several powerful real estate enterprises for the Dongwaitan plot in Yangpu District was largely due to its significant location advantages and the good sales performance of surrounding projects. It is reported that the Dongwaitan plot is approximately 400 meters away from Fuxing Island and about 600 meters away from the Huangpu River in a straight line, allowing residents to enjoy the scenic views of the river and the island up close. Regarding the performance of the new housing market around the Dongwaitan plot, Zhang Wenjing, General Manager of Shanghai Data at China Index Academy, introduced that projects near the plot include Hopson Development Holdings • MANYUN Shanghai and China Construction First Group • Waitanyuanzhu, etc. Hopson Development Holdings • MANYUN Shanghai achieved an average monthly sales rate of 16 units in the past six months, with an average selling price of 121,700 yuan/m². Phase II of China Construction First Group • Waitanyuanzhu, which was launched in March this year, offered 114 units with an average price of 109,000 yuan/m², achieving a sales rate of 90% on the day of launch. CNOOC Yundi Jiuzhang, which was launched for the first time on April 28 this year, offered 187 units and was sold out on the same day. It is worth mentioning that Yangpu District held a conference on the high-quality development of talents on May 8, where multiple measures to attract talents, such as the "Implementation Rules of the Preferential Enjoyment Plan," were introduced. In terms of housing, the plan clearly states that high-quality content creators who purchase their first home in the district will be given a one-time housing subsidy ranging from 500,000 yuan to 2 million yuan. Priority will be given to supplying housing units in high-quality talent communities, and a monthly rental subsidy of up to 8,000 yuan will be provided. Industry insiders believe that the measures taken by Yangpu District to build a talent hub will not only attract outstanding talents but also drive a corresponding increase in their housing demand. In addition to the Dongwaitan plot in Yangpu, the plot in the eastern area of Songjiang New City also attracted significant attention.The plot attracted five bidders, including Poly Development, China Merchants Shekou, Xiangyu Group, etc., to participate in the auction. The plot was ultimately acquired by China Railway Construction at a price of 2.471 billion yuan, with a floor price of 25,288 yuan/m² and a premium rate of 20.442%. In addition, the multipurpose combined land plot on North Sichuan Road in Hongkou District boasts a strong location advantage, being just 300 meters away from the North Sichuan Road Station on Line 10, with comprehensive living facilities, though it is not purely residential land. "The commercial and cultural plots within the multipurpose combined land plot on North Sichuan Road in Hongkou District, due to the protective development of historical buildings involved, impose high requirements on developers, resulting in a transaction at the base price," said Zhang Wenjing. The plot on North Sichuan Road is divided into one residential plot and one commercial and cultural plot, with a starting price of 2.157 billion yuan. Ultimately, the plot was won by the North Bund Group at the base price of 2.157 billion yuan, with a comprehensive floor price of 67,131 yuan/m² (including a residential floor price of 87,997 yuan/m²) and a premium rate of 0%. "This land auction in Shanghai once again confirms the characteristics of land supply that combines central urban areas with suburbs, prioritizing the supply of high-quality land within the region, which helps to boost the enthusiasm of the land auction market. In the future, as the enthusiasm of the land auction market spreads to the property market, coupled with the continuous entry of high-quality projects and the ongoing optimization of policies, the stable trend of Shanghai's property market will be further consolidated," said Zhang Wenjing. From the perspective of Shanghai's new home market, according to monitoring data from Centaline Property, there was a certain correction in the transaction volume of Shanghai's property market in April, with the transaction area of newly-built commercial residential properties in Shanghai that month reaching 550,000 m², comparable to the same period last year. During the Labour Day holiday this year (5.1-5.5), the transaction area of newly-built commercial residential properties in Shanghai was approximately 29,700 m², an increase of 18.32% compared to last year's holiday. Lu Wenxi, a senior research manager at Centaline Property, stated that recently, mid-to-high-end improvement-oriented products in Shanghai have achieved good sales figures, and with a stable supply, some scarce new projects in certain areas have attracted market attention. "Especially for popular properties, their good sales performance has further enhanced market purchasing willingness. In addition, the secondary market maintaining a good transaction rhythm and the smooth operation of the replacement chain have also played a role in accelerating the entry of high-end improvement-oriented buyers into the market," Lu Wenxi added.

Against the backdrop of continuous adjustments in the real estate market, intensifying the implementation of urban village renovations and dilapidated housing renovations is considered an important measure to promote urban development and stabilize the property market. Regions including Guangdong Province have set clear goals and related measures in this regard. According to information released on May 7 on the official website of the Guangdong Provincial Government, Guangdong will implement a special action plan to boost consumption, covering areas such as promoting employment and income growth for residents, and supporting residents' security and upgrading bulk consumption. To better meet housing consumption needs, Guangdong proposed to make good use of the policy allowing local government special bonds to be used as capital, actively and steadily advancing urban village renovations under the new model. The province will also solidly promote the renovation of old residential communities, with no fewer than 600 old communities to start renovation in 2025, and initiate the replacement of 26,500 old residential elevators. Analysts believe that the statements in the consumption-boosting measures regarding better meeting housing consumption needs imply that policies related to real estate are more focused on boosting domestic demand and consumption, based on people's aspirations for better living conditions, thereby releasing potential housing consumption demand. The inherent market demand and the momentum formed in the process of meeting this demand will objectively play a role in stabilizing the market. "Intensifying the implementation of urban village renovations and dilapidated housing renovations can not only release the rental and purchase demands of young people and new urban residents but also meet the housing upgrade needs of existing urban residents. This is the most significant component of the structural demand in China's large cities. As most urban residents' housing needs shift from availability to quality, the comfort of living for some residents in urban villages and dilapidated housing has not been fully met. This group is expected to become the core and important subject of future housing consumption," said Li Yujia, chief researcher at the Guangdong Housing Policy Research Center. In fact, not only Guangdong but also Henan, Shanghai, Chongqing, and other regions have recently made arrangements for urban village renovation work. On March 17, the Henan Provincial Development and Reform Commission (NDRC) published a report on the execution of the 2024 National Economic and Social Development Plan and the draft of the 2025 National Economic and Social Development Plan on its official website. Regarding the construction of livable and resilient cities, the report clearly stated that Henan will improve the urban renewal promotion mechanism, increase the renovation of old residential communities and urban villages, orderly implement the renovation and reinforcement of urban buildings, strengthen the supply of affordable housing in key cities, renovate 416 urban villages and 1,459 old residential communities, and add 57,000 units of affordable housing. According to information released on April 18 on the official website of the Shanghai Municipal Housing Administration, Minhang District held a meeting on April 16 to advance the renovation of urban villages. During the meeting, the district housing authority reported on the overall progress of urban village renovation in the district and outlined the work objectives and tasks for 2025. On April 28, the Chongqing Municipal Development and Reform Commission issued a notice soliciting public comments on the "Implementation Plan for Chongqing's Special Action Plan to Boost Consumption (Draft for Comment)." Regarding the promotion of healthy development in housing consumption, the plan proposed that Chongqing would seek funding support through multiple channels to ensure the construction of affordable housing and rental housing, and would continue to advance the renovation of urban villages and dilapidated housing in urban and rural areas. Analysts from Guolian Minsheng Securities noted that after Minister Ni Hong of the Ministry of Housing and Urban-Rural Development proposed in October 2024 to implement an additional 1 million urban village and dilapidated housing renovations through monetary housing resettlement, many localities have responded positively. "Monetary resettlement for urban village renovation can enhance residents' home-buying capacity and promote the release of improvement demand. With the support of special loans, special bonds, and other funding, it is expected that many cities will actively advance this initiative," analysts from Guolian Minsheng Securities stated. It is worth mentioning that after five years of pullback in the scale of shantytown renovation monetization, the market effects driven by urban village and old neighborhood renovations have once again attracted attention. Consequently, researchers have compared urban village renovation with shantytown renovation, arguing that the expansion of urban village renovation does not equate to shantytown renovation 2.0. Researchers have indicated that there are significant differences between the current round of urban village renovation and the previous round of shantytown renovation in terms of scale, funding sources, and renovation cycles. From the perspective of scale, the Liu Qinghai team from Founder Securities' Real Estate and Construction Division pointed out that from 2014 to 2018, policies strongly supported monetary resettlement for shantytown renovation, setting targets of 18 million and 15 million units over three-year periods, respectively. During these five years from 2014 to 2018, a total of 29.12 million housing units were actually renovated nationwide. The current target of 1 million units for urban village renovation represents a significant difference in scale compared to the previous round of shantytown renovation. The team also noted that, according to government announcements, during the 13th Five-Year Plan period (2016-2020), over 23 million shantytown renovations were initiated nationwide, with total investment reaching approximately 7 trillion yuan. The funding primarily came from four major sources: Policy-Based Financial Instruments (PSL), bank loans, special bonds, and general fiscal expenditures, with a disbursement ratio of approximately 4:3:2:1. In terms of funding sources, the previous round of shantytown renovation primarily relied on PSL (Pledged Supplementary Lending) and special bonds, whereas the current round of urban village renovation is included in the scope of support for local government special bonds. Regarding renovation cycles, shantytown renovation projects generally have a relatively small scale and involve relatively fewer stakeholders, resulting in shorter renovation cycles. In contrast, individual projects in urban village renovation are larger in scale, involve more stakeholders, and have longer renovation cycles. Analysts from Founder Securities believe that while the expansion of urban village renovation projects in cities differs from the previous round of shantytown renovations in terms of funding sources and scale, it underscores the determination and direction of higher authorities to stabilize the real estate market. "Both the current round of urban village renovations and the previous round of shantytown renovations aim to reduce inventory, with monetary compensation as the primary means of resettlement, and both have covered third- and fourth-tier cities. Therefore, the expansion of the current round of urban village renovations is expected to drive a significant influx of capital and resources into second- and third-tier cities, promoting the recovery of the real estate markets in these cities, and thus gradually spreading the trend of 'halting the decline and restoring stability' from first-tier cities to second- and third-tier cities," said the aforementioned analyst.

On May 7, at a press conference held by the State Council Information Office, Li Yunze, Director of the National Financial Regulatory Administration, stated that the authority would expedite the introduction of a series of financing systems tailored to the new model of real estate development, aiming to sustain and consolidate the stability of the real estate market. Industry insiders pointed out that currently, the most closely watched aspect is the implementation of standardized housing projects, which implies that there is potential for increased policy support in development loans and mortgage loans in the future. "It is anticipated that, on one hand, there will be an increase in financial support for enterprises, boosting the supply of high-grade housing; on the other hand, financial incentives aligned with the demand for high-grade housing are also expected to be gradually implemented. Both supply and demand sides will continue to work together to facilitate the release of demand for improved housing." Additionally, at the conference, the People's Bank of China proposed reducing the interest rate on personal housing provident fund loans by 0.25 percentage points. It is estimated that this will save residents over 20 billion yuan in annual interest expenses on provident fund loans, which is conducive to supporting the rigid housing demand of resident families and promoting the stabilization of the real estate market. Industry insiders told a Caixin reporter that this move widens the gap between provident fund loan interest rates and commercial loan interest rates. In the future, the interest rates on existing provident fund loans are also expected to be lowered. Expedite the introduction of new real estate financing regulations; approved loan amounts under the "white list" increase to 6.7 trillion yuan. The April 25 meeting of the Political Bureau of the CPC Central Committee once again put forward clear requirements for stabilizing the housing and stock markets. At today's press conference, the National Financial Regulatory Administration stated that it would resolutely implement the deployment requirements of the CPC Central Committee and the State Council, collaborate to deliver a "stimulus policy package {{referring specifically to the economic stimulus policies of the People's Bank of China}}", and actively carry out relevant work. It will expedite the introduction of a series of financing systems tailored to the new model of real estate development, aiming to sustain and consolidate the stability of the real estate market. In terms of specific measures, Li Yunze pointed out that the authority would accelerate the improvement of a series of financing systems tailored to the new model of real estate development, including loan management methods for real estate development, personal housing, and urban renewal. It would guide financial institutions to continue maintaining stable real estate financing, effectively meeting rigid and improved housing demands, and strengthening financial support for high-grade housing. "In the new model, the most closely watched aspect is the implementation of standardized housing projects. This implies that there will be better financial support in these areas in the future to better facilitate the release of housing demand, such as policy support in development loans and mortgage loans," said Yan Yuejin, Deputy President of the E-House China R&D Institute, to a Caixin reporter. The China Index Academy also predicts that more supporting policies will be continuously implemented in the future, with loan support for enterprises and individuals being continuously increased.Meanwhile, this time it was also emphasized to "strengthen the funding supply for high-grade housing." The 4.25 Political Bureau meeting clearly stated the need to "increase the supply of high-grade housing." This time, the emphasis was on strengthening financial support. It is expected that, on the one hand, financial support for enterprises will be increased to boost the supply of high-grade housing; on the other hand, financial preferential policies that match the demand for high-grade housing are also expected to be gradually implemented. Both the supply and demand sides will continue to work together to promote the release of improved housing demand. "The new model itself also needs to actively address the past debt issues of real estate enterprises. To promote the transformation of real estate enterprises, it is necessary to actively resolve debts. Through a series of supporting financing policies, it will help various real estate enterprises accelerate debt resolution and digest existing assets this year, as well as contribute to the development of a new round of real estate enterprises. Therefore, whether it is the home-buying market or the capital market, it is important to understand the function of such supporting financing systems in repairing the fundamentals of real estate enterprises," said Yan Yuejin. Li Yunze stated that solid efforts should be made to expand and enhance the efficiency of the urban real estate financing coordination mechanism. Currently, the "white list" loans approved by commercial banks have increased to RMB 6.7 trillion, supporting the construction and delivery of over 16 million residential units, effectively safeguarding the legitimate rights and interests of home buyers and providing important support for the real estate market to stabilize and recover. The positive changes in the real estate market are also reflected in credit data. In the first quarter of this year, the balance of real estate loans increased by more than RMB 750 billion, with new personal housing loans achieving the largest single-quarter increase since 2022, and housing rental loans increasing by 28% YoY. The real estate market in many parts of the country has continued the warming trend from the first quarter, especially in first- and second-tier cities, where the real estate market continues to maintain a positive momentum. "In key cities, the transaction volumes of new and second-hand homes have shown YoY growth for two consecutive quarters. Although the growth rate in the first quarter of this year has declined compared to the growth rate in the fourth quarter of last year, the trend of stabilizing and recovering is still very evident," Li Yujia, chief researcher at the Guangdong Provincial Housing Policy Research Center, told reporters from Cailian Press. From the perspective of housing market transactions in April and during the Labour Day holiday, despite the good sales performance of high-end improved housing projects in hotspot cities... According to monitoring by China Index Academy, in May, several high-quality projects are still expected to enter the market in key cities such as Beijing, Shanghai, Hangzhou, Nanjing, and Chengdu, mainly focusing on mid- to high-end improved products. The implementation of favorable policies combined with the entry of high-grade projects into the market is expected to better promote the release of improved and replacement demand. It is expected that the real estate market will continue to recover in May. Interest savings for residents exceed RMB 20 billion annually due to the reduction in housing provident fund interest rates At a press conference, Pan Gongsheng, Governor of the People's Bank of China, pointed out that the interest rate on personal housing provident fund loans will be reduced by 0.25 percentage points.Specifically, the interest rate for first-home loans with a term of over five years has been reduced from 2.85% to 2.6%, with interest rates for other terms adjusted accordingly. "It is estimated that this will save residents over 20 billion yuan in annual interest expenses on housing provident fund loans, which is conducive to supporting the rigid housing demand of resident families and promoting the stabilization of the real estate market," Pan Gongsheng pointed out. The market believes that this measure will better leverage the people-friendly function of housing provident fund loans, while also widening the gap between housing provident fund loan interest rates and commercial loan interest rates. Regarding the background of the policy's introduction, Li Yujia stated that the earlier decline in residents' enthusiasm for buying homes led to an increase in the housing provident fund pool, creating conditions for reducing interest rates and improving utilization efficiency. "In addition, previously, the commercial loan interest rate was 3%, while the housing provident fund loan interest rate was 2.85%, with a very small gap between the two. Coupled with the limit on housing provident fund loan amounts, this led to a decrease in enthusiasm for housing provident fund loans," he said. "This time, commercial loan interest rates have not been directly reduced, thereby widening the gap between housing provident fund loan interest rates and commercial loan interest rates. Currently, the gap stands at 40 basis points. Coupled with the increase in housing provident fund loan amounts in various regions, this will help improve the utilization efficiency of housing provident fund loans, better leverage their cost-reducing effects, and support both rigid demand and improvement demand," Li Yujia stated. According to estimates, if a homebuyer has a housing provident fund loan with a principal amount of 1 million yuan, a 30-year term, and equal principal and interest payments, the monthly payment before the policy was 4,136 yuan, while after the reduction in the housing provident fund loan interest rate, the monthly payment becomes 4,003 yuan, a decrease of 133 yuan. The total repayment amount has changed from 1.49 million yuan to 1.44 million yuan, a direct reduction of 50,000 yuan. Yan Yuejin pointed out that this year, there has been a continuous emphasis on interest rate cuts for housing provident fund policies to better leverage the people-friendly and consumption-supporting functions of housing provident fund loans. "By cutting interest rates, the issue of the interest rate spread between previous housing provident fund loans and commercial loans has been reduced, ensuring that the housing provident fund policy can exert better effects," he said. In addition, regarding the interest rates for existing housing provident fund loans, Yan Yuejin pointed out that based on past practices in financial policy operations, this policy mainly refers to the interest rates for new housing provident fund loans. However, he expects that subsequent adjustments will also be made to reduce the interest rates for existing housing provident fund loans in accordance with existing policies.