China unveiled a series of “historic” measures on Friday to stabilize the crisis-hit property sector, in a bid to boost demand, slow down falling prices, and reduce unsold homes.
Local governments will be allowed to purchase “some” apartments at “reasonable” prices, which will be used to provide affordable housing, Vice Premier He Lifeng said, without giving a timeline or a target for the purchases.
The central bank will establish a 300 billion yuan ($41.53 billion) relending facility for affordable housing, and mortgage interest rates and downpayment requirements will be lowered further.
The policies announced on Friday are a significant departure from the government’s previous approach to the property sector, which has been characterized by tight restrictions on lending and development. The new measures are seen as a sign that the government is becoming increasingly concerned about the risks posed by the property sector to the broader economy.
The property sector accounts for a significant portion of China’s GDP, and a prolonged downturn in the sector could have a major impact on the country’s economic growth. The government is hoping that the new measures will help to stabilize the property sector and prevent it from becoming a drag on the economy.
The measures announced on Friday were welcomed by investors, and the CSI 300 Real Estate index jumped nearly 9%. However, analysts cautioned that the impact of the measures will depend on the details of their implementation, and whether local governments have the financial resources to purchase unsold apartments.
The crisis in the property sector began in 2021, when a number of developers defaulted on their debts. The defaults triggered a wave of panic selling, and prices have been falling ever since. The government has tried to support the sector with a series of measures, but so far these have had little impact.
The new measures announced on Friday are the most significant intervention by the government to date, and they represent a major shift in policy. The measures are likely to have a significant impact on the property sector, and they could also have a positive impact on the broader economy.
