The State Council of the Chinese government is considering asking local governments across the country to buy millions of unsold homes.
This has to be one of the most ambitious attempts to save the collapsing real estate market. Home sales in China fell nearly 47% in June, and supply will be at its highest level since 2016.
China has already experimented with several pilot programs to eliminate excess housing stock with government funding, but the new plan appears to be on a much larger scale.
Local state-owned companies will be asked to help buy homes from struggling developers at deep discounts, using loans provided by state-owned banks, sources close to the government said. Many of these properties will be converted into affordable housing.
China's Ministry of Housing has not confirmed the status of the proposal. Although it may take months to learn the details of the plan and consider its viability in the first place. The crisis in China's real estate sector is one of the main problems of the world's second largest economy.
„This plan can directly provide liquidity to construction contractors and improve their financial condition, as well as immediately recycle excess stock. However, a lot of funds are needed, at least one trillion yuan, to make the impact more significant,” said Raymond Cheng, head of China real estate research at CGS International Securities HK.
In late April, the Communist Party promised to explore new approaches to easing the real estate crisis. The Politburo, made up of 24 of China's top leaders, said the country was exploring ways to "digest" your existing housing stock.
In the past, Beijing has relied on government purchases of housing, although most smaller initiatives have not been particularly successful. In early 2023, the People's Bank of China provided 100 billion yuan (12.76 billion EUR) to some financial institutions through a specialized lending service. The money was intended to help eight towns buy properties on a trial basis for use in local social rental schemes.
After the Politburo meeting, several major cities, including Hangzhou, lifted all restrictions on home purchases to encourage transactions. Meanwhile, more than 50 Chinese cities have launched "swap" programs that offer incentives for residents to sell their old homes and convert them into new ones as part of efforts to boost demand.
The stock of unsold housing in China has increased to more than 334 million square meters in 2023 – the highest level since 2016, according to official data.
You can see detailed statistics on average property prices in Bulgaria by cities and neighborhoods HERE