The housing prices in China have slumped in the first four months of the year, even though the output increased by 7 percent and investment in fixed assets increased by 4.2 percent. The Chinese government have come up with several measures to address the crisis that have been hurting the real estate industry in China.
The new measures include cutting the amount home buyers need as deposits. The government is also encouraging local authorities to purchase the unsold properties.
China’s solution to the housing slump
The People’s Bank of China (PBOC) said it would set up a 300bn yuan ($41.5bn; £32.8bn) facility to support affordable housing.
The money would be aimed at supporting local state-owned enterprises to buy unsold homes, said Tao Ling, a deputy governor at the central bank at a news briefing.
The vice premier He Lifeng told officials that the government will buy property at “reasonable prices” and sell them at affordable prices to the people.
The government has also cut interest rates and freed up billions of dollars of financing to help the struggling developers deliver houses which was already promised and paid for.
The Central Bank of China has also scrapped the minimum mortgage rate and cut the minimum down payment for first-time buyers from 20 percent to 15 percent. The minimum deposit for second homes was lowered to 25 percent from 30 percent.
Figures earlier released on Friday showed that the new home prices had fallen for a tenth month in a row. The prices dropped by 0.6 percent every month.
China’s real estate continues suffering
The Chinese housing market has slumped after a crackdown on excessive borrowings by property developers, slowing growth and dragging other businesses.
Dozens of developers who built high-rise buildings that have transformed urban landscapes across China have also defaulted.
China’s property developers have been facing a major financial squeeze since 2021 when authorities introduced measures to curb the amount big real estate companies could borrow.
Evergrande, the world’s most indebted property developer was also ordered to liquidate and its collapse led to protests and a crisis.
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