Unveiled Measures by China to Escape the Property Market Crisis
The Chinese government has announced a series of measures aimed at addressing the struggles in the country's property market, which has been facing challenges since 2021.
One of the key measures involves easing home purchase restrictions, particularly in suburban areas of major cities like Beijing. The government has recently scrapped curbs for qualified buyers purchasing homes in these areas, although restrictions remain in the central city core.
Another important step is allowing greater use of housing provident funds for home purchases. More local governments have relaxed rules to enable people to use their provident funds for home purchases, and some have also offered subsidies to encourage buying.
In an effort to alleviate pressure on the market, Beijing is reportedly preparing to have state-owned enterprises absorb unsold inventories from cash-strapped developers.
Despite these interventions, the property market remains weak. New-home prices have continued to fall, though declines have slightly eased in some major cities. According to recent figures, new home prices had fallen for the 10th month in a row in April, with the sharpest reduction since November 2014.
The People's Bank of China (PBOC) is also establishing a 300bn yuan facility to support affordable housing. However, no details have been provided yet about the number of homes that could be bought or the timescale the initiative would run for.
Similar initiatives are being considered in other parts of the world. For instance, the Plymouth Council in the UK is considering a plan to buy homes to ease the housing crisis, although no specific details have been provided about the number of homes that could be bought or the timescale of the initiative.
Despite the ongoing struggles, the Chinese government has not disclosed any details about the new measures they are taking to address the property market struggles. The government has also not revealed any plans to offer additional support to struggling developers like County Garden, whose potential liquidation hearing in a Hong Kong court was adjourned to 11 June.
In conclusion, China's recent measures focus on loosening purchase restrictions in suburban areas of key cities, allowing greater use of housing provident funds for buying homes, providing subsidies to homebuyers in certain localities, and mobilizing state-owned enterprises to buy unsold properties from developers. These steps aim to stabilize prices and support the sector but so far have had limited impact amid the ongoing, prolonged downturn.
The Chinese government's latest measures in the housing industry extend beyond the property market, as they are also looking to finance and business sectors for solutions. One example is the People's Bank of China (PBOC)'s establishment of a 300bn yuan facility to support affordable housing, an initiative that integrates the financing aspect of the business world. Furthermore, other governments worldwide, like the Plymouth Council in the UK, are considering similar business strategies, such as buying homes to alleviate housing crises, demonstrating a global approach to addressing the challenges in the housing industry.
