In a bid to reduce inventory, the Chinese Communist Party (CCP) has implemented various real estate policies, which are believed to be ineffective. Recently, authorities announced another major real estate policy, aiming to promote the acquisition of existing commercial housing for the purpose of affordable housing in cities above the county level. Experts and the public in mainland China alike believe that people are not buying into these policies anymore. The introduction of this new significant policy itself signifies the government’s urgency and financial strain at the local level.
The CCP’s Ministry of Housing and Urban-Rural Development recently held a video conference on the acquisition of existing commercial housing for affordable housing, emphasizing the promotion of this initiative in cities above the county level, following the approach of “government-led, market-oriented operation.”
According to reports in mainland Chinese media, this latest policy announcement comes after a series of significant real estate policies were issued on May 17, and arrangements were made for real estate policies by the State Council on June 7. Xinhua Information Technology Co., Ltd. certified securities consultant Hu Xiaohui stated on June 26 that the government has resorted to drastic measures this time to stabilize housing prices. Hu emphasized that cities above the county level must stabilize the housing market – any unsold new houses should be swiftly converted into affordable housing, which can assist developers and provide affordable housing for more people.
Hu further commented that while similar policies have been implemented before, the expansion to county-level cities this time indicates the severe situation where housing sales have stagnated, especially in lower-tier cities. The pressure on real estate developers is immense, and the government is feeling the urgency along with them due to slow land sales and tight financial situations.
In a meeting on April 30, the CCP Central Political Bureau proposed to “coordinated research on digesting the existing housing stock and optimizing policy measures for new housing increment.”
Subsequently, “inventory reduction” became a focal point of real estate policies. In addition to policies aimed at boosting demand, such as lowering down payment requirements and removing the minimum interest rate for mortgages, the government announced on May 17 that in cities with excessive commercial housing inventory, the government may purchase and acquire some of the homes at a reasonable price for affordable housing. On the same day, the central bank announced a 300 billion yuan mortgage loan program for affordable housing.
During the CCP’s State Council meeting on June 7, it emphasized the need to fully understand the new changes in the supply and demand relationship of the real estate market and continue researching and implementing new inventory reduction policies to stabilize the market.
Hu Xiaohui pointed out that regardless of the policies enacted, the housing market cannot return to its previous state. She noted that investment and policy are two different matters now. To stimulate real estate demand, measures such as interest rate cuts and tax reductions no longer sway ordinary people, as they have lost confidence in the future and are hesitant to take on the pressure and risk of leveraging to buy homes.
The National Bureau of Statistics of China released the housing price index for 70 cities in May, indicating that housing prices in these cities are still declining, with a general downward trend in sales of second-hand homes.
Guangdong self-media commentator Qin Zhanggui stated that this indicates that the series of policies introduced by the government in May have been ineffective. She suggested that the people not buying houses currently either lack confidence in the real estate market or face financial constraints, making homeownership out of reach due to down payment or mortgage affordability concerns.
Regarding the Ministry of Housing and Urban-Rural Development’s initiative to promote the acquisition of existing commercial housing for affordable housing in cities above the county level, Qin Zhanggui described it as a desperate measure. She believed that this approach is more of a spectacle to demonstrate determination to rescue the real estate market rather than a practical solution, as it aims to encourage people to buy houses rather than the government acquiring them.
Qin commented further that this method may not stabilize housing prices and does not address the fundamental issues of the real estate market. At best, it can relieve some pressure on developers and banks, preventing further deterioration, which is considered a commendable effort.
Online users have also expressed skepticism towards the official initiative of promoting the acquisition of existing commercial housing for affordable housing in cities above the county level.
– Yang Fanqichuan: If salaries are not paid, where is the extra money to buy houses?
– Brave Sailing Ship JR: Do county-level governments have the funds to purchase houses?
– Free-spirited Spring Breeze Q4: County-level local governments are in debt for billions, salaries are paid through loans, where will the money come from?
This ongoing discourse reflects the challenges and doubts surrounding the recent real estate policies introduced by the CCP to address the current housing market situation in China.