China announced plans for local governments to buy “some apartments.” This is a bid to stabilise the crisis-hit property sector.
Beijing has also pledged forceful attempts to deliver unfinished homes.
Data shows property prices have experienced the fastest drop in more than nine years. The property sector accounts for a fifth of economic activity in China. However, its slump has hurt China’s economy.
The State Council, China’s Cabinet, said it would hold a news conference focusing on the property industry on Friday.
The property market soured in 2021, triggering a series of defaults among developers. China has been trying to turn around the property sector through various measures. Vice Premier He Lifeng told an online meeting with other authorities that local governments can buy homes at “reasonable” prices.
He said that local governments, already some $9 trillion in debt, can repurchase land sold to developers. He promised affordable housing would be provided. However, he did not give a timeline by when this would happen.
Meanwhile, the central bank said it would further lower mortgage interest rates and downpayment requirements.
China’s CSI 300 Real Estate index has jumped more than 4% on the announcements.
Macquarie chief China economist Larry Hu said, “in order to evaluate how powerful the impact will be, the key questions are who will be funding the purchase.” He added that it depended on “how much they’ll fund in the end.”
The stock market’s upbeat mood was dampened by poor housing data on Friday. Meanwhile, a Hong Kong court is hearing a petition seeking the liquidation of embattled developer Country Garden.
The hearing was adjourned for June 11.
Another major developer, China Evergrande Group was ordered to be liquidated in January.
(REUTERS)
