After worrying about the sagging real estate market for some time, Wang Shi, Chairman of China Vanke Co. Ltd., a listed real estate company, is relaxing a little more these days, because of the government's new policies to revitalize the real estate market.

The State Council held a meeting on October 17, requiring local governments to increase construction of housing for low-income residents and reduce housing transaction taxes and fees to boost home sales. On October 22, the People's Bank of China (PBC), the country's central bank, said it was reducing the required minimum down payment on individual housing loans to 20 percent from 30 percent as of October 27. It also said it was cutting the interest rate for individual housing loans supplied by the country's provident funds by 0.27 percentage points.

China's real estate market entered a slump during the second half of 2007. When apartment sales started dropping off, Wang lowered the prices of units at his housing projects in response to lower market demand, instead of sticking to higher prices as other property developers did. But his strategy failed, and many people who bought homes from his company have requested that their home sales contracts be cancelled, while others have refused to pay their monthly mortgage payments to banks.

Yet, Wang said he believes that the government's new policies would be conducive to changing the sluggish real estate market so that the volume of sales transactions eventually would pick up.

Fewer home purchases

Current government data indicate how poorly the industry has performed recently.