China mulls buying unsold homes to rescue property market: Bloomberg
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The news: China is weighing up plans for local governments to purchase millions of unsold homes in efforts to save the country’s struggling property market.
The numbers: China’s home sales, which are currently the Chinese economy’s biggest drag, dropped around 47% in the first quarter of 2024, and unsold property inventory is sitting at an eight-year high.
The context: According to sources cited by Bloomberg, the State Council is seeking feedback from several provinces and government entities on the plan, which would significantly outsize previous pilot programs to clear excess housing with state funding.
Sources explain that local state-owned companies would be asked to buy unsold homes from struggling developers at large discounts, before many of the homes are then converted into affordable housing.
Raymond Cheng, head of China property research at CGS International Securities HK told Bloomberg that the proposal would require at least one trillion yuan ($207 billion) to have a meaningful impact, while Shujin Chen, head of China financial and property research at Jefferies Financial Group, estimated at least 2 trillion yuan would be needed.
The source: Bloomberg
