(March 5): Chinese officials pledged to stabilise the real estate sector at a crucial political meeting, but stopped short of announcing major policies some economists think are needed to turn around a yearslong slump.
The central government will use city-specific policies to “control new supply and reduce inventory”, according to a government work report to the national parliament on Thursday.
Policymakers will also explore multiple ways to revitalise the existing housing stock, the statement said. They further repeated a vow to encourage the acquisition of existing housing inventory, primarily for use in affordable housing.
The readout reiterated much of Beijing’s rhetoric on bringing an end to the property crunch, but it also showed that policymakers aren’t willing to announce sweeping stimulus at a time when the economy is losing steam. At the same meeting, the government set an economic growth target of 4.5% to 5% for this year — the least ambitious goal since 1991.
Despite the slump, real estate is likely to represent around 17% of China’s economic output this year, according to Bloomberg Intelligence, a sign of how important it is for Beijing to stem the pain.
The financial hub of Shanghai eased homebuying rules last month, allowing more non-residents to purchase homes in its urban zones. Beijing’s local government further relaxed rules for non-resident homebuyers in December.
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China’s more than US$1 trillion ($1.28 trillion) new home market remains fragile, with sales value nationwide down more than half last year from its 2021 peak. The property crisis has triggered about US$130 billion in defaults including the collapse of China Evergrande Group, once the country’s biggest developer.
Some analysts think there is more pain to come. Home prices will keep falling for at least two more years, John Lam, UBS Group AG’s head of China property research, said in an interview late last year. Lam said values of used homes in major cities have dropped more than a third from their peak levels.
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