AFP, Beijing
Thu Oct 17, 2024 10:59 Last update: Thu. 17 Oct 2024 11:02
An aerial photo shows residential buildings under construction by Chinese developer Vanke in Hangzhou, east China’s Zhejiang province, March 15, 2024. Photo: AFP/File
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An aerial photo shows residential buildings under construction by Chinese developer Vanke in Hangzhou, east China’s Zhejiang province, March 15, 2024. Photo: AFP/File
China said on Thursday it would increase credit available for unfinished housing projects to more than $500 billion, unveiling another round of measures to support the sector and try to revive the economy.
The real estate sector has long contributed about a quarter of gross domestic product and has seen dazzling growth for two decades, but the years-long housing crisis has stunted growth as authorities eye a target of around five percent for 2024.
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At a briefing, Housing Minister Ni Hong offered new aid, saying Beijing would “increase the lending scale of whitelisted projects by the end of the year to four trillion” yuan ($562 billion) from more than $2 trillion.
The white list program announced earlier this year prompts local authorities to recommend housing projects for financial support and work with banks to ensure their implementation.
“The urban real estate financing coordination mechanism should strive to whitelist all eligible real estate projects,” Ni said.
“An additional million damaged homes… will be renovated,” he added. “There are many safety hazards and poor living conditions in urban villages, and people are eager to renovate.”
The move, he said, “would favor absorbing the existing commercial housing stock.”
China’s leaders warned last month that the economy was beset by “new problems” as officials unveiled a series of stimulus measures in one of the biggest moves to boost growth in years.
The measures included a series of interest rate cuts, easing restrictions on home purchases and moves to free up cash so banks can lend more.
On Thursday, Beijing said it estimates that “existing mortgage rates will fall by about 0.5 percentage points on average” as a result of these cuts.
This, said Central Bank Vice President Tao Ling, would mean “a saving of 150 billion yuan in total interest spending, benefiting 50 million families and 150 million residents.”
The market’s surge fueled by hopes for a major stimulus died down as authorities refrained from providing specific figures for the rescue package or developing any of the plans.
Many major cities have also eased restrictions on home purchases in recent months, most recently this week in Chengdu, the capital of southwestern Sichuan province, and the northern port city of Tianjin.
The latest announcement comes as China prepares to release growth figures on Friday for the third quarter, which is expected to be the slowest this year.
Hong Kong ended the morning up 0.9% and Shanghai rose 0.1%, but both countries rose well above their earlier highs on hopes that the check-off would provide fresh support. Real estate companies in the red.
“They are still trying to talk about this topic, and there is more and more talk about stabilizing the real estate market,” Stephen Innes, managing partner at SPI Asset Management, said in a note.
“As the briefing went on, it became clear: traders were not thrilled,” he said.
“But let’s be honest, China’s real estate mess can’t be patched up with a few speeches and half-baked measures,” Innes added.
Analysts polled by AFP predict overall growth of 4.9 percent in 2024 – even worse than last year, which was the weakest in decades outside of Covid.
Still, Beijing said it was “fully confident” it would achieve its five percent target.