China unveils steps to dig themselves out of the property crisis
Since 2021 the world’s second largest economy have faced property struggles. However, the country have recently revealed their most significant steps yet to address it.
China’s property market was a key driver of growth up until developers began selling houses that hadn’t been built yet. With ever-rising prices, citizens were happy to keep purchasing – even if they didn’t intend to live in the houses, which inevitably caused their market to crash. However, this week, new measures have been announced which include cutting the amount home buyers need for a deposit and encouraging local authorities to purchase unsold properties.
The People’s Bank of China (PBOC) claimed it would establish a 300bn yuan – which equals to £32.8bn – facility to support affordable housing. This is designed to help local state-owned enterprises to but unsold homes.
In addition, the central bank have also axed the minimum mortgage rate and cut the minimum down payment for first-home buyers from 20% to 15%. The lowest deposit for second homes was also reduced from 30% to 25%.
Today, He Lifeng, Vice Premier, informed officials that councils can purchase properties at ‘reasonable prices’ and sell them as affordable housing, although he hasn’t offered any details yet about the number of homes that could be bought or the timescale the initiative would run for.
As well as the new measures being revealed, new figures have also been released which show new home prices had fallen for the 10th month in a row in April – the 0.6% month-on-month decline was the sharpest reduction since November 2014.
Against this backdrop, County Garden – a struggling Chinese developer – had a hearing in a Hong Kong court over its potential liquidation on Friday. Although, this has been adjoined to 11th June.
Since 2021 developers in China have been facing severe financial pressures as local authorities announced measures to curb the amount real estate companies could borrow.
Image: Rikke Filbært
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