(Reuters) – China plans to buy millions of unsold homes from local governments across the country, Bloomberg News reported on Wednesday, after a meeting of the ruling Communist Party leaders called for efforts to clear the growing housing stock. It was reported that the company is considering.
The report added that the State Council is gathering feedback on the preliminary plan from various ministries and government agencies, citing people familiar with the matter.
Following the news, China's blue-chip CSI300 index rose 2% and the yuan strengthened.
The real estate sector has been in deep recession for many years due to the debt crisis among developers. A flurry of policy measures since 2022 has failed to turn around the sector, which accounts for about a fifth of China's economy and remains a major drag on consumer spending and confidence.
The Communist Party's Politburo held a meeting on April 30 and announced improvements to policies to clear the growing housing stock.
Dozens of cities are offering subsidies to encourage residents to replace older apartments with new ones, in an effort to sell off their growing inventories of new apartments and provide vital cash flow to struggling developers. providing.
According to the report, local state-owned companies were asked to help purchase unsold homes from struggling developers at deep discounts using loans provided by state-owned banks, and then It added that many of the homes would be converted into affordable housing.
Chinese officials are discussing the details and feasibility of the plan, and if the country's leaders decide to go ahead with it, it could take months to make a final decision, the report said.
China's Ministry of Housing did not respond to a Reuters request for comment.
The biggest drag on real estate demand is that cash-strapped private developers have halted construction of large numbers of pre-sold new homes that cannot be delivered on time. Meanwhile, the buyers of these homes continue to repay their mortgages.
Estimates vary widely, but analysts agree there are tens of millions of unfinished apartment units across China after the construction boom collapsed.
“Our view is that the Chinese government must ultimately address concerns regarding housing delivery,” Nomura economists said in a research note.
“The Beijing government will have to spend its own money, even using notes from the People's Bank of China, to help developers complete the pre-sold new homes.”
(Reporting by Gao Liangping in Beijing and Surbhi Misra in Bengaluru; Editing by Kim Cogill and Jacqueline Wong)
