China aims to solve property puzzle with affordable housing push, but debt cloud remains
- Local authorities in China have been encouraged to buy unsold homes to create affordable housing amid efforts to address a property crisis
China’s housing authority has become the latest to join a government plan for hundreds of cities to buy unsold commercial homes and convert the units into affordable housing amid a stubborn property crisis, but analysts said some indebted urban areas may have trouble raising the money.
The Ministry of Housing and Urban-Rural Development said on Thursday that local authorities should push cities at or above the county level to acquire existing commercial homes, according to state broadcaster CCTV.
Local governments should encourage the purchases “vigorously” and in an “orderly and effective” way, the ministry said.
“The ministry said cities and counties should consider actual demand for affordable housing, the inventory level of the commercial housing market and other factors based on the local real estate market situation,” CCTV said.
James Macdonald, the Shanghai-based head of China research with property services firm Savills, said China could increase the supply of rental properties in poorer areas, while making some headway in destocking unused properties.
These conversions and acquisitions will likely only represent a small portion of the overall market
“There’s been a spate of different policies [to destock],” Macdonald said. “The policies sound good in principle, but it just depends on where the government is going to get the money.”
