China’s central bank held a meeting on Wednesday to boost its financial support for affordable housing to speed up sales of unsold homes as a housing crisis threatens growth in the world’s second-largest economy.
The central bank set up a 300 billion yuan ($41.4 billion) loan facility for affordable housing last month, and Wednesday’s virtual meeting, held from the city of Jinan in the eastern province of Shandong, is the latest effort to promote the mechanism to local governments and banks.
Beijing has given the go-ahead for local state-owned enterprises to buy back unsold completed homes, and the loan mechanism aims to help them make these purchases at “reasonable prices”.
The People’s Bank of China (PBOC) said in a statement on Wednesday that the mechanism aims to accelerate the sale of existing commercial housing from a market perspective.
She added that the facility was in addition to its “whitelist” mechanism launched in January to approve housing development projects, under which local governments nominate projects and public and commercial banks are encouraged to provide loans to developers.
The PBOC said the purchase of unsold housing by state-owned enterprises must adhere to “voluntary participation, demand-based ordering and reasonable prices” to ensure the viability of the business, and that any new hidden debt locally should be strictly prohibited.
Officials from the cities of Jinan, Tianjin, Chongqing and Zhengzhou shared their local experiences at Wednesday’s meeting, which was also attended in person by PBOC Governor Pan Gongsheng and Vice Governor Tao Ling.
The $41 billion loan facility, which translates into 500 billion yuan in bank financing for local state-owned enterprises, is unlikely to help cash-strapped developers, analysts and developers say, because of the program’s limited size and potentially low prices. ($1 = 7.2534 Chinese yuan renminbi) (Reporting by Ellen Zhang, Albee Zhang and Kevin Yao; Writing by Hugh Lawson)
