(Yicai) Jan. 9 -- Bond financing in China’s real estate sector tumbled 18.4 percent last year from the year before but there are signs of recovery as new policies take effect, according to a recent study.

Chinese developers raised CNY565.31 billion (USD77.1 billion) through the sale of debt instruments last year, according to a report released today by real estate think tank, the China Index Academy.

Bond financing in the property industry has been sliding since the second half of 2021, but, since September, there has been year-on-year growth each month thanks to the low base line in the previous year, meaning that developers have seen a rebound in debt financing, the report said. However, whether this growth can be maintained remains to be seen, it added.

Looking ahead to 2025, the economic stimulus rolled out in September last year is expected to boost market confidence, however the property market still faces many challenges. Financing policies are likely to remain accommodative, although the scale of financing will continue to be influenced by the pace of market recovery, the report said.

The cost of bond financing has dropped significantly in the last year, thanks to a series of interest rate cuts, changes in the structure of financing enterprises, and product structure adjustments. The average interest rate dipped 0.72 percentage point in 2024 year on year to 2.95 percent.

More specifically, the average interest rate for credit bonds tumbled 0.71 percentage point to 2.86 percent, that for overseas bonds slid 1.17 percentage point to 5.22 percent while that for asset-backed securities sank 0.59 percentage point to 3.01 percent.

Despite this, fewer bonds were issued in general. The scale of credit bonds issued slumped 18.5 percent from a year earlier, while that of overseas bonds plunged 69.5 percent and that of asset-backed securities tumbled 13.6 percent.

The real estate market still faces many challenges this year, the report said. Developers should explore different channels to expand financing and improve cash inflows. They may also consider extending the maturity of existing debt or refinancing through new borrowings.

Editor: Kim Taylor