Real Estate

China has pledged $42 million in aid to help the struggling property market.

The Chinese government has promised support for state-owned enterprises that will allow them to buy unsold apartments.

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Chinese authorities last week announced a number of measures to support the country’s struggling real estate sector.

The measures also include support for state-owned enterprises that will allow them to buy unsold apartments, an effort that could provide developers with the funding they need to complete construction on properties that have already been sold. CNBC.

Tao Ling, deputy governor of the People’s Bank of China, told reporters on Friday that the central bank will provide 300 billion yuan ($42.5 billion) to financial institutions to lend to state-owned enterprises to buy unsold apartments that have already been constructed.

Real estate companies can then use the profits from these sales to complete the construction of the yet-to-be-completed apartments.

China’s property market has been plagued by an influx of pre-sold yet unfinished homes in recent years as developers face financial problems. Estimates put the number already sold. Unfinished house for 20 million.

At the current sales pace, it will take more than two years to clear the current stock of new, manufactured homes, according to one. Report from Caixin.

Of China Real estate issues will take a long time to resolve, experts agree. One obstacle facing new initiatives is that local governments still have limited resources, limiting the number they can purchase.

Homebuyers in China also face a high barrier to entry, with high housing prices preventing many from becoming homeowners.

Zhou Ning, professor of finance at Tsinghua University, said that unless potential homebuyers perceive a drastic change in housing prices, existing housing costs are still too expensive to generate household income or rent. CNBC. “However, I’m not sure if the government is ready to go to that extent to make another big increase in house prices.”

On Friday, the People’s Bank of China took steps to address this by removing the floor on mortgage interest rates and lowering the minimum down payment ratio for first- and second-time homebuyers.

Email Ben Verde.

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