China support for unfinished housing projects doubles to 4 trillion yuan

Staff reporter and Reuters

China will nearly double credit lines for unfinished private housing projects to 4 trillion yuan (HK$4.36 trillion) by the end of the year, housing and urban-rural development minister Ni Hong said yesterday.

Redevelopment of cities will also gather pace, with a million "urban villages" to be included in such plans, Ni said, adding that people's resettlement will help absorb existing housing inventories.

Xiao Yuanqi, deputy director of the State Financial Regulatory Administration, said the approved loans for "white list" projects had risen to 2.23 trillion yuan as of October 16.

The pledges for increased financing for cash-strapped developers and urban redevelopments are part of a recently announced series of measures to stabilize a sector that plunged into crisis in 2021, dragging broader growth in the world's second-largest economy.

"It can be said that the bottoming out of the property market has begun," Ni said, adding the October data would deliver a positive outcome.

Also yesterday, New World Development's mainland unit said its home transactions during the National Holiday exceeded those in September.

Since last year, China had implemented incremental policies to lift homebuyer confidence amid concerns over persistently declining home prices, timely deliveries of homes by developers, and the status of their own jobs and incomes in a fragile economy.

No official estimates on the number of presold, unfinished homes have been released. According to a Nomura report published in January, 20 million units were sold but not yet constructed.

Ni said 2.46 million new homes have been delivered since May.

In January, China announced a plan for a "white list" of projects that can receive financing to ensure that developers could complete construction and deliver buyers' homes. This summer, banks had approved 5,392 of such projects, with financing up to nearly 1.4 trillion yuan.

Morningstar Research, according to equity analyst Jeff Zhang, saw that no new incremental policies on boosting home demand had been announced. But Zhang expects an acceleration in execution with more distressed developers receiving funds for home completions, which would help shore up homebuyers' confidence.

Meanwhile, Standard Chartered estimates Beijing will issue 12-15 trillion yuan in government bonds in three years.

Finance ministry officials on Saturday announced measures to prop up the property sector, allowing local governments to use funds from special bonds to buy unsold homes and idle land.

In September, the central bank announced measures including cuts in the minimum down payment ratio to 15 percent for all buyers.

Tao Ling, a deputy governor at the central bank, said interest rates on existing mortgages are expected to drop by half a percentage point on average, benefiting 50 million households and 150 million residents.

The rate cuts helped households save 150 billion yuan, she said.