In a decisive response to a persistent downturn in its property sector, China is set to increase financing for approved housing initiatives to an impressive 4 trillion yuan (approximately $562 billion).
This strategic move was announced during a press conference in Beijing on Thursday, underscoring the government’s commitment to revitalize an industry that has faced significant challenges in recent years.
Ni Hong, the Minister of Housing and Urban-Rural Development, highlighted the government’s plan to also focus on redeveloping 1 million urban villages nationwide, although specifics regarding the funding for this redevelopment effort remain unspecified.
Recent indicators suggest a potential turnaround in the housing market, with Ni asserting that the sector has “bottomed out” after enduring three years of decline.
Notably, data from October reveals a marked increase in property sales, a positive sign amid the broader struggles of the industry.
The Chinese government has intensified its efforts to stabilize the real estate market, particularly following a prolonged slump exacerbated by a crackdown on excessive borrowing practices.
Once regarded as a cornerstone of economic growth, the property market has shifted into a phase of stagnation.
To further bolster the sector, local authorities were recently empowered to utilize unallocated government bond quotas and elevate debt ceilings, measures aimed at providing additional support to the beleaguered housing market.
Furthermore, in late September, mortgage rates for individual borrowers were reduced by an average of 0.5 percentage points, and the minimum down payment for second homes was lowered from 25% to 15%.
Since January, the government has identified specific housing projects eligible for financing, and as of Wednesday, loans allocated for these projects totaled 2.23 trillion yuan (around $313 billion), as reported by Xiao Yuanqi, deputy director of the National Financial Regulatory Administration.
However, some financial analysts remain skeptical about the effectiveness of these measures in addressing the property crisis in the near future.
Stephen Innes, managing partner at SPI Asset Management, described the situation as a “ticking time bomb,” predicting that it could take years, if not decades, to resolve the underlying issues.
“No matter how much money or effort they throw at it, this problem isn’t going away anytime soon,” he stated, emphasizing the gravity of the challenge ahead.
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