Beijing: As part of a new round of measures to stabilize the crisis-hit property sector, on Friday ( May 17 ), announced plans for local governments to buy” some” apartments and pledged forceful efforts to deliver unfinished homes.
New data earlier in the day that showed the fastest decline in new home costs in more than nine decades before revealed the state of an industry that, at its optimum, accounted for a second of economic activity and continues to be a major drag on growth.
Vice Premier He Lifeng told an online conference with another officials that local governments may purchase homes at “reasonable” prices because the wave of assist measures over the past two years have failed to turn the property market about.
The houses would be used to provide affordable accommodation, He said, without giving a timetable or a destination for the purchases, nor detailing how they would be funded.
He even said regional governments, now about US$ 9 trillion in debt, may repurchase land sold to developers, and promised that authorities will “fight difficult” to complete stalled projects.
Separately, the central bank said it would further lower mortgage interest rates and downpayment requirements.
China’s CSI 300 Real Estate index jumped more than 4 per cent on the announcements.
” It’s a positive and encouraging direction that the governments are stepping in to buy housing inventory,” said Macquarie’s chief China economist Larry Hu.
The key questions are,” But who will be funding the purchase and how much will they ultimately fund it,” to determine how powerful the impact will be.