China’s housing regulator pledged to swiftly implement a program to purchase unsold apartments and turn them into affordable housing, its latest effort to cushion a record property slump.
The government will also push forward renting and selling public housing units as soon as possible when conditions are right, Vice Minister of Housing and Urban-Rural Development Dong Jianguo said in a briefing in Beijing on Aug 23. The ministry didn’t unveil a volume target.
Chinese authorities are trying to introduce a new housing model and put a floor under the prolonged property crisis. The real estate slowdown, now into its fourth year, has dragged down everything from the job market to consumption and household wealth.
President Xi Jinping unveiled sweeping goals last month to bolster the finances of China’s indebted local governments and give them more autonomy in regulating property markets, though details have so far been limited. The country is now considering a new funding option for local governments to buy unsold homes after a series of rescue packages failed to prop up the market, Bloomberg News reported this week. That’s on top of a 300 billion yuan ($54.98 billion) central bank fund announced in May.
A Bloomberg Intelligence gauge of Chinese property developers shares briefly erased losses on Friday before trading little changed. The index has slid 36% from a May high as optimism for a rebound in the real estate sector wanes.
The ruling Communist Party last month pledged to accelerate a new housing model that emphasizes renting. The country will also build and supply more affordable residences to meet the needs of working-class people, the top leadership said after a key meeting in Beijing last month.
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China has long sought to transform the housing market for younger, first-time homebuyers who have been pushed out by spiraling home values. In 2017, Xi delivered his now-famous mantra that “houses are built to be inhabited, not for speculation”, which aimed to tame runaway property prices and push a housing model that emphasises renting.
Apart from the purchases in the works, the housing ministry is asking local governments to strengthen planning and prearrangement of such purchases for 2025 and 2026, according to the vice minister.
China has also started the construction of 235 projects for affordable housing and urban village resettlement, with an investment of more than 440 billion yuan in the first seven months of the year, the vice minister added.
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‘Uphill battle’
The country has formed a top-down plan to win the “uphill battle” of ensuring home delivery, the vice minister said. Since mid-May, the housing authority teamed up with the banking regulator and the National Administration of Financial Regulation to conduct comprehensive reviews on 3.96 million residences scheduled to be delivered this year, he added.
People “have paid money, so they should get their homes”, Dong said.
Chinese banks have approved about 1.4 trillion yuan of bank credit to more than 5,300 property projects on a “white list”, the vice minister added. The list was drawn up last year for developers eligible for financial support to complete projects.
Bloomberg Intelligence estimates that at least 48 million homes in China have been sold before construction is completed, bigger than Germany’s total housing stock in 2021.
