Analysis of the Impact of Commercial Property Down Payment Ratio Policy Adjustment on Valuations of A-Share Real Estate and Banking Stocks

Based on the above market data and policy information, I now provide you with a systematic and comprehensive professional analysis report.

On January 17, 2024, the People’s Bank of China (PBOC) and the State Administration of Financial Regulation (SAFR) jointly issued a notice, uniformly lowering the minimum down payment ratio for commercial property (including “residential-commercial dual-purpose property”) purchase loans from the original 50% to 30%[1]. This marks the first major adjustment since the implementation of the national commercial property loan policy, which is of milestone significance.

• Unified Deleveraging
  : The down payment ratio for commercial property is reduced from 50% to 30%, a decrease of 20 percentage points
• City-Specific Policy Flexibility
  : Provincial branches may, based on the regulatory requirements of local municipal governments, independently determine the minimum down payment ratio floor for each city under their jurisdiction on the basis of the national unified minimum down payment ratio
• Expanded Scope of Application
  : Covers various commercial real estate products such as retail shops, office buildings, service apartments, shopping malls, and hotels

1. Acute Inventory Overhang Issue
   : All regions are facing the dilemma of high unsold commercial property inventory and extended destocking cycles. The China Index Academy points out that high inventory in the commercial office market has become an industry consensus in recent years[1].

2. Persistent Slump in Investment Willingness
   : Affected by the macroeconomic environment, residents’ willingness to take on leverage for property purchases has declined, and transaction volume in the commercial property market has continued to shrink.

3. Demand for Revitalizing Stock Assets
   : In hot cities, institutional or individual investors have shown increased willingness to invest in commercial office properties and convert them into short-term or long-term rental products such as long-stay apartments and serviced apartments. The policy adjustment aligns with changes in market demand[1].

Based on market data from January 2026[3][4], the real estate sector showed weak performance during the policy release period:

• The real estate sector continued to underperform the broader market in January, with a cumulative excess return of -4.61%
• Mainstream capital continued to flow out, with a single-day net outflow of approximately 2.28 billion yuan on January 14[3]
• The sector ranked among the top in overall decline, forming a stark contrast with tech sectors such as computer and communications

1. Liquidity Improvement Effect
   • A 20-percentage-point reduction in the down payment ratio means a significant lowering of the threshold for homebuyers, which theoretically can release approximately 20% of incremental purchasing power
   • For high-priced commercial properties, the reduction in down payment amount will significantly lower the purchase threshold

2. Marginal Improvement on the Demand Side
   • Li Yujia, Chief Researcher of the Guangdong Provincial Housing Policy Research Center, stated that loosening policies is reasonable in the face of structural loan demand[1]
   • The rental yield of small-sized service apartments has exceeded 3%, which is higher than the three-year fixed deposit interest rate of banks, making them attractive for investment

3. Expectation of Accelerated Inventory Destocking
   • The policy can guide resources to flow to more efficient areas and projects
   • Commercial real estate projects with poor locations or operations may attract new investors or operators due to policy stimulation

1. Limited Fundamental Improvement
   • Despite frequent policy easing signals, sales data has recovered slowly
   • The debt risks of property developers have not been fully resolved, and capital allocation willingness towards the real estate sector remains low[3]

2. Tortuous Valuation Recovery Path
   • The real estate sector has long been in the bottom range of valuations, and mean reversion requires stronger fundamental support
   • The market has become “fatigued” by repeated policy easing signals, leading to diminishing marginal effects

The banking sector showed even weaker performance in early 2026, becoming the worst-performing sector among the 31 Shenwan first-level industries[2][3]:

• As of the close on January 15, the banking index had fallen 3.36% year-to-date, ranking first in decline among the 31 Shenwan first-level industries[2]
• Shanghai Pudong Development Bank (SPDB) recorded a cumulative year-to-date decline of over 10%, while Bank of Nanjing fell 7.17%[2]
• Mainstream capital saw a single-day net outflow of approximately 3.56 billion yuan, ranking among the top sectors in capital outflow[3]

On January 15, the PBOC simultaneously announced[2]:

• Cut the interest rates of various structural monetary policy tools by 0.25 percentage points
• Lower the one-year interest rate for various relending facilities from 1.5% to 1.25%
• Increase the quota for agriculture and micro-enterprise relending by 500 billion yuan, and establish a new relending facility for private enterprises

Multiple market analysts pointed out[2]:

• The combined effect of structural tool “interest rate cut + quota expansion” deserves more attention
• In the short term, banking stocks are more likely to reflect “convergence of downward risk space” rather than a trend upward movement
• Banks adopt prudent assessment standards, and a 30% down payment ratio is actually not low, and it may be lowered again in the future[1]

1. Historical Comparison
   : The price-to-earnings (PE) ratio of the real estate sector has fallen to a historically low range, providing a valuation safety margin
2. Cross-Sector Comparison
   : Compared with popular sectors such as technology and consumption, the sector has a significant valuation discount
3. Fundamental Support
   : Substantive improvement requires verification from sales data and continued policy easing measures

1. Dividend Yield Advantage
   : The dividend yield of the banking sector remains attractive, with individual stocks having a dividend yield of over 5%
2. Valuation Bottom
   : The banking index is in the historically mid-to-low valuation range
3. Institutional Share Buybacks
   : Multiple listed banks have seen share buybacks by executives or major shareholders[2]

According to market data[3][4], in January 2026, capital showed a clear pattern of “abandoning traditional sectors and favoring technology growth sectors”:

1. Selective Stock Selection
   : Focus on high-quality property developers with healthy inventory structures and layouts in core cities
2. Focus on Sub-Sectors
   : Policy-benefiting sub-sectors such as service apartments and rental properties
3. Long-Term Perspective
   : Current valuations have long-term allocation value, but patience is required to wait for a fundamental inflection point

• Sales data recovery falls short of expectations
• Policy effects have a time lag
• Impact from developer credit risk events

1. Focus on Leading Banks
   : Leading banks such as Industrial and Commercial Bank of China (ICBC) and China Merchants Bank (CMB) have stronger risk resistance capabilities
2. Dividend Strategy
   : High-dividend banking stocks provide defensive value in the current market environment
3. Focus on Marginal Changes
   : The expansion of structural tools has improved expectations for bank asset quality

• Persistent pressure from NIM narrowing
• Risk of rising non-performing loans in commercial real estate
• Drag on asset quality from macroeconomic downturn

1. Real Estate Sector
   : The policy to lower the commercial property down payment ratio has had a limited short-term boost to the valuation of the real estate sector, and the market response has been flat. The policy is more of a signal of marginal improvement, and substantive fundamental improvement still requires verification from sales data. The sector’s valuation is at a historically low level, with long-term allocation value, but the recovery path may be tortuous.

2. Banking Sector
   : The policy combination (structural interest rate cut + down payment ratio adjustment) has a neutral-to-slightly-positive impact on banking stocks. The improvement in liability-side costs helps stabilize NIM expectations, but the marginal increase in commercial real estate risk exposure also needs attention. The banking sector showed weak performance early in the year, and its high dividend characteristic provides a certain safety margin.

3. Market Style
   : Current market capital clearly prefers technology growth sectors, while traditional financial and real estate sectors face capital outflow pressure. Valuation recovery requires stronger fundamental catalysts.

• The China Index Academy predicts that more cities will implement inventory destocking policies for the commercial office market[1]
• Experts stated that the down payment ratio may be lowered again in the future[1]
• It is expected that there is still room for reserve requirement ratio (RRR) cuts and interest rate cuts in 2026[1]

• Short-term: Policy easing signals are unlikely to reverse the market style, and technology sectors remain the first choice for capital
• Mid-term: If economic recovery is confirmed and sales data improve, the financial and real estate sectors are expected to see a valuation recovery rally
• Long-term: The real estate industry has entered a stage of stock optimization, and high-quality property developers and leading banks will receive valuation premiums

[1] Securities Times Network - “Commercial Property Down Payment Ratio Cut to 30%: Experts Say Further Cuts May Be Possible in the Future” (https://www.stcn.com/article/detail/3595557.html)

[2] Sina Finance - “Banking Stocks Top the List of Annual Declines: What Impact Will Structural Interest Rate Cuts Have?” (https://finance.sina.com.cn/roll/2026-01-15/doc-inhhkwcv4771077.shtml)

[3] Securities Times Network - “Data Review: 142 Stocks Saw Main Capital Net Inflow Exceeding 100 Million Yuan; Institutional Investors Bought 24 Stocks on the Dragon and Tiger List” (https://www.stcn.com)

[4] International Financial News - “Continue to Expand Volume: Is A-Shares Shifting Gears?” (https://www.ifnews.com)

[5] Eastmoney - “Wan Cai Evening News | Commercial Property Down Payment Ratio Cut to 30%” (https://finance.eastmoney.com/a/202601153620742223.html)

[6] Caifuhao - “Article ‘Improving and Stabilizing Real Estate Market Expectations’ Published in Qiushi Magazine” (https://caifuhao.eastmoney.com/news/20260112225446115314730)