BEIJING: China on Friday (May 17) announced plans for local governments to buy “some” apartments and pledged forceful efforts to deliver unfinished homes, as part of a new round of measures to stabilise the crisis-hit property sector.
Earlier in the day, fresh data showing the fastest drop in new home prices in more than nine years highlighted the worsening state of an industry which at its peak accounted for a fifth of economic activity and remains a key drag on growth.
As waves of support measures over the past two years have failed to turn around the property sector, Vice Premier He Lifeng told an online meeting with other authorities that local governments can buy homes at “reasonable” prices.
The homes would be used to provide affordable housing, He said, without giving a timeline or a target for the purchases, nor detailing how they would be funded.
He also said local governments, already about US$9 trillion in debt, can repurchase land sold to developers, and promised that authorities will “fight hard” to complete stalled projects.
Separately, the central bank said it would further lower mortgage interest rates and downpayment requirements.
China’s CSI 300 Real Estate index jumped more than 4 per cent on the announcements.
“It’s a positive and encouraging direction, that the governments are stepping in to buy housing inventory,” said Macquarie chief China economist Larry Hu.
“But in order to evaluate how powerful the impact will be, the key questions are who will be funding the purchase and how much they’ll fund in the end.”
