China Boosts Housing Market with $1.5 Trillion Housing Provident Fund

In a major effort to stabilize its property market, China is increasing its reliance on the Housing Provident Fund — a government-managed savings program totaling 10.9 trillion yuan ($1.5 trillion). As mortgage lending slows, this low-interest, state-backed financing model is regaining importance, Bloomberg reports.

The fund, established over 30 years ago based on Singapore’s model, is financed by monthly contributions from employees and employers. It allows homebuyers to obtain mortgages at interest rates lower than those offered by commercial banks. Its significance has grown amid declining bank profits, rising bad debts, and tighter credit conditions.

By the end of 2024, the fund had issued 8.1 trillion yuan in mortgages, up 3.4%, while bank lending fell 1.3%. In Beijing, housing fund loans made up 33% of all mortgage transactions — a notable rise from 29.4% in 2020. According to Chen Wenjing of China Index Holdings, the fund has become “one of the leading instruments of housing support.”

President Xi Jinping has emphasized the need to stabilize the market and shield it from external economic risks. The renewed focus on the fund follows renewed U.S.-China trade tensions in early June. Officials now view the fund as a more stable and manageable policy tool.

Historically, its use was constrained by various barriers: capped loan amounts, inability to use the fund for down payments, and eligibility tied to marital status and contribution history. As a result, many buyers used mixed financing: bank loans for the majority and fund-based mortgages for a smaller, cheaper portion.

Since 2023, regulations have gradually relaxed. In 2025, at least 50 cities eased restrictions, increasing loan limits and broadening usage. In high-cost cities like Shenzhen, buyers can now use the fund for down payments. In March, the mortgage cap was nearly doubled from 2023 levels. The People’s Bank of China cut housing fund interest rates to 0.9 percentage points below bank rates, helping buyers save roughly 3% on payments.

The housing fund remains one of the few reliable financing sources. By the end of 2024, it held more funds than it had disbursed, backed by contributions from about 180 million workers and employers, according to the Ministry of Finance and the People’s Bank of China.

The article features the case of 30-year-old Ellie Zhang, who bought a 65 sqm apartment in suburban Beijing in 2023. She uses the fund for partial monthly repayments, paying an interest rate of just 2.85%, which she says makes it “very affordable.”

Some revival is also visible among major state-owned developers, who have resumed active land purchases in top-tier cities. Local governments have lifted profit caps on new home sales, enabling higher margins and encouraging new project launches.

Still, despite growing state involvement and limited signs of recovery, China’s housing market remains under pressure. In April 2025, prices for existing homes in the top 100 cities fell 0.7% month-over-month. Sales continued to decline in May, with leading developer Country Garden reporting a 28% drop in transactions.

According to UOB Kay Hian’s Liu Jieqi, the policy shift — including greater use of the fund — is more symbolic than transformative. “It’s unlikely to spark a rapid sales rebound,” he notes, pointing to the need for broader macroeconomic improvements. Bloomberg Intelligence analysts Kristy Hung and Monica Hsiao add that the fund offers an alternative to banks but doesn’t resolve weak demand. The IMF estimates that China may need to allocate up to 5% of GDP over the next 3–5 years to complete housing projects and protect buyers’ rights — a prerequisite for lasting recovery.