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China pledges billions in measures to support struggling property sector


China announced “historic” steps to stabilize the crisis-hit property sector on May 17, 2024, allowing local governments to buy “some” apartments, relaxing mortgage rules and pledging to deliver unfinished homes. 

Nurphoto | Nurphoto | Getty Images

BEIJING — Chinese authorities on Friday pledged new support for state-owned enterprises to enable them to buy unsold apartments, in an effort that could help developers get more funding to finish construction on pre-sold properties.

These and other measures announced Friday marked Beijing’s latest efforts to address issues in the massive real estate sector.

“I think it is encouraging that the policy is taking a turn of direction trying to support the housing market,” said Zhu Ning, a professor of finance at Tsinghua University and author of the book “China’s Guaranteed Bubble.”

People’s Bank of China Deputy Governor Tao Ling told reporters at a briefing Friday the central bank would provide 300 billion yuan ($42.25 billion) to financial institutions to lend to local state-owned enterprises (SOEs) so they can buy unsold apartments that have already been built.

How China's property bubble burst

The central bank expects the support to release 500 billion yuan in financing for such purchases, which the SOEs could turn into affordable housing.

The real estate companies can then use funds earned from those sales to complete construction on other apartments, the central bank said.

As for unfinished, pre-sold properties, the National Financial Regulatory Administration Deputy Director Xiao Yuanqi told reporters that commercial banks have provided 935 billion yuan in loans to finish construction on whitelisted projects since the program was released in January.

“The government’s purchase of housing inventory can inject more liquidity to developers, who could then have more resources for housing delivery,” Larry Hu, chief economist at Macquarie, told CNBC. “Finally the government stepped in as the buyer of the last resort.”

“At this stage, it’s mainly SOEs and local governments to implement the policies, but their resources may be too limited to move the needle at the macro level,” he said. “Later on, we might see more efforts from the central government.”

[Developers] that must go bankrupt should go bankrupt, while those that need to be restructured should be restructured.

Dong Jianguo

deputy head, Ministry of Housing & Urban-Rural Development

Earlier on Friday, Vice Premier He Lifeng spoke at a national videoconference meeting on ensuring the completion and delivery of pre-sold homes, according to state media.

Officials speaking to reporters Friday said that housing projects that could not meet the requirements to be on the whitelist needed to address their issues on their own.

Developers “that must go bankrupt should go bankrupt, while those that need to be restructured should be restructured,” Dong Jianguo, deputy head of the ministry of Housing and Urban-Rural Development, told reporters in Mandarin, translated by CNBC. He said homebuyers’…



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