China cities get leeway to clear homes inventory

Bloomberg and staff reporter

China is considering scrapping a price cap for local governments buying unsold apartments, according to people familiar with the matter, as Beijing seeks to speed up the clearance of millions of empty homes and stem the property downturn.

Under the proposal, local authorities across the country will no longer be subject to a price ceiling equivalent to the cost of affordable homes in the same neighborhood, the people said, asking not to be identified discussing a private matter.

The move, which has yet to be finalized, may give city and provincial officials greater autonomy in offering competitive prices and ease the financial burden of developers, the people said.

For China's affordable housing, local governments can only sell them to qualified buyers at no more than 5 percent profit after taking into account land and construction costs.

In Hong Kong, mainland property shares rose. China Vanke (2202) climbed 4.34 percent to HK$6.49, Country Garden (2007) gained 5.15 percent and Sunac China (1918) rose 3.94 percent.

In other news, China Citic Bank International has filed a HK$652 million lawsuit against developer Logan (3380) over a loan the builder defaulted on in 2023, according to a court document seen by Bloomberg News.

Citic's claim relates to the loan, which has HK$588 million of principal outstanding and HK$64 million of interest, as well as other costs, according to a writ filed in Hong Kong's High Court. Logan obtained the loan from China Citic Bank in 2021 and defaulted in October 2023.

The lawsuit adds to the challenges Logan faces as it works to restructure debt amid a yearslong property crisis.

Logan's shares closed 6 percent higher at HK$1.06 in Hong Kong.