China To Spend $562 Billion On Housing, Urban-Rural Projects

China will expand a “white list” of housing projects eligible for financing and increase bank lending for such developments to 4 trillion yuan ($562 billion) by year-end, Minister of Housing and Urban-Rural Development Ni Hong said on Thursday.

Redevelopment of cities will also gather pace, with a million “urban villages” to be included in such plans. Ni said at a press conference that people being resettled will help absorb existing housing inventories.

Saving Housing Sector

The pledges for more financing for cash-strapped developers and urban redevelopments are part of a series of measures announced in recent weeks aimed at stabilising a sector. The housing sector plunged into crisis in 2021, dragging on broader growth in the world’s second-largest economy.

“It can be said that the bottoming out of the property market has begun,” Ni told reporters.

Since last year, China had implemented incremental policies to lift home buyer confidence amid concerns about persistently declining home prices, timely deliveries of homes by developers, and the status of their own jobs and incomes in a fragile economy.

No official estimates have been released on the number of presold but unfinished homes. According to a Nomura report published in January, 20 million units were sold but not yet constructed.

Ni said 2.46 million new homes have been delivered since May.

White List Projects

In January, China announced a plan for a “white list” of projects that can receive financing to ensure that developers could complete construction and deliver homes to buyers. As of this summer, banks had approved 5,392 such projects, with financing reaching nearly 1.4 trillion yuan.

Approved loans for the “white list” projects had risen to 2.23 trillion yuan as of Oct. 16, Xiao Yuanqi, deputy director of the State Financial Regulatory Administration, said at the press conference.

China’s yuan held steady against the U.S. dollar as reaction to the housing policy briefing was muted overall, traders said.

“The most significant directive pertains to credit support to projects in the whitelist. We expect an acceleration in execution with more distressed developers receiving funds for home completions, which would help shore up homebuyers’ confidence.”

Cuts In Down Payment

On Saturday, finance ministry officials also announced measures to prop up the property sector, allowing local governments to use funds from special bonds to buy unsold homes and idle land.

In late September, the central bank announced measures including cuts in the minimum down payment ratio to 15% for all buyers.

Interest rates on existing mortgages are expected to drop by an average half a percentage point, benefiting 50 million households and 150 million residents, Tao Ling, a deputy governor at the central bank, said at the same press conference.

The rate cuts helped households save 150 billion yuan, she said.

In a September meeting, the politburo, a top decision-making body of the ruling Communist Party helmed by President Xi Jinping, called for further measures to stabilise the market.

(with inputs from Reuters)