As Beijing attempts to address an overabundance of unfinished houses that have alarmed homeowners, Premier Li Qiang stated on Tuesday that China will attempt to stabilize the real estate market with targeted measures while supporting “justified” developments. Li’s annual report to the Chinese parliament included a policy message that reaffirmed the belief that the second-biggest economy in the world is still dealing with a mix of partially finished projects and unsold residences, which will take years to resolve and continue to impede economic growth. Since 2021, the property industry has swung from crisis to crisis as a result of a liquidity crisis brought on by a governmental crackdown on developers using excessive leverage.
It will “meet justified financing demands of real estate enterprises under various forms of ownership on an equal basis, so as to promote the steady and healthy development of the real estate market,” Li stated. The government’s ambitions for the real estate market continue to unnerve investors, as evidenced by the 42% decline in the mainland CSI 300 Real Estate Index over the last year. Certain commentators are drawing parallels with the decades of deflation and stagnation that Japan formerly experienced. The real estate market is still not stable. “Deflation is now a possibility due to its problems, which are a reflection of previous insufficient easing,” stated Chil Lo, Senior Market Strategist for Asia Pacific at BNP Paribas Asset Management in Hong Kong.
China started a “whitelist” system in January and asked state banks to increase lending to specific residential projects that had been approved. About 6,000 real estate projects had been proposed for financing as of February 28, and 276 cities across 31 provinces and regions had established such structures. Over 200 billion yuan ($27.79 billion) in loans have been authorized by commercial banks for qualified projects. According to Li’s report, China would also expedite the creation of a new property sector model, emphasizing the construction of more inexpensive housing and satisfying diverse housing demands; however, few specifics were given. We will act more quickly to support a new real estate development model in response to the trend of new urbanization and shifts in the supply and demand in the housing market, Li stated.
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