China property: Beijing launches US$41 billion of funds to buy unsold homes in major drive to rescue housing market

by Yulu Ao and Ji Siqi at

Beijing has announced 300 billion-yuan (US$41.5 billion) in funding to help clear excess housing inventory, as well as measures to ensure developers have access to financing and that homes are delivered on time, as China embarks on its most ambitious effort yet to rescue the property sector and shore up the broader economy.

The “relending” funds will enable local state-owned enterprises to buy unsold homes they can then offer as affordable housing, top officials told a media briefing on Friday afternoon.

They will be offered to 21 national lenders, from policy banks to state-owned commercial banks and joint-stock banks, at a rate of 1.75 per cent, according to Tao Ling, deputy governor of the People’s Bank of China.

The move aims to encourage financial institutions to extend financing to selected regional state-owned companies to support their purchases of unsold homes, said Tao. It is likely to translate into about 500 billion yuan in bank loans for housing purchases.“
This is a significant move by central government in response to the changes of supply-demand dynamics in the property market, and to cater to people’s need for quality homes,” Tao said. “We will promptly implement it and launch multiple measures.”

The money should be used to buy homes that have already been constructed but not sold, and local governments will be able to decide whether to join the programme according to their needs. The policy is applicable to all types of property developer, regardless of ownership, according to Tao.

“[The relending] is a good start and can add more funding, if needed, as central government looks determined to solve the property market problem,” said Raymond Cheng, managing director of CGS International Securities Hong Kong. “But it may take a few months to realise.”
Other moves announced on Friday included measures to ensure the timely delivery of housing stock and to encourage the repurchase of “idle” land.