China is considering public purchases of millions of homes
The Chinese government is planning to enter the market directly to revive the struggling real estate market.
China is considering a plan that would enable local governments to purchase millions of unsold homes across the country, according to sources familiar with the matter. China’s State Council has sought feedback from various provincial governments and government organizations on the plan, the sources said. China had previously tried to reduce the stock of unsold houses with the help of public financing. However, this plan being discussed is expected to be larger-scale.
State-owned enterprises will be asked to buy unsold homes from distressed developers using loans provided by state banks, according to two sources. Most of the properties in question will then be converted into affordable housing. Sources said it could take months for the plan to be finalized.
The fact that housing sales in China fell by approximately 47 percent in the first four months and the unsold housing stock is at the highest level in eight years indicates a real estate crisis that leaves approximately 5 million people at risk of unemployment or reduced income.