China cuts rates, could buy up commercial housing to boost property market
Property and construction accounts for more than a quarter of gross domestic product, but the sector has been under unprecedented strain since 2020, when authorities tightened developers' access to credit in a bid to reduce mounting debt.
And in an effort to boost the ailing market and ensure millions of unused homes go to those in need of housing, Beijing's State Council met Friday, state news agency Xinhua said.
"Great efforts should be made to promote the handling of commercial housing projects classified as under construction that have been sold and are facing difficulties to deliver," Vice Premier He Lifeng told the meeting, according to state media.
"In cities where there is a large inventory of commercial housing, the government can place orders and purchase some of the commercial housing at reasonable prices as appropriate to use as affordable housing," he added.
No details were provided on how many houses would be bought.
"Relevant local governments should... properly handle transferred idle residential properties through retaking, acquisition... to help housing companies with financial difficulties solve their challenges," He said.
State media also reported, citing the central bank and the National Financial Regulatory Administration, that they would cut the minimum down payment rate for first-time homebuyers to 15 percent, one of the country's lowest-ever rates.
The rate will be cut to 25 percent for second-home purchases, it added.
The moves are some of Beijing's most ambitious yet in seeking to reverse a chronic crisis in the housing market.
"This is the lowest down payment ratio in history," Yan Yuejin, research director of the Yiju Research Institute real estate think-tank, told state-backed Phoenix TV.
"It is not only the most lenient policy in the history of mortgage loans, but also the most lenient policy among various types of home purchase policies in recent years," he added.
Friday's meeting was attended by regulators, representatives of top banks, local governments and the property market, Bloomberg News reported.
The State Council has said it will convene a briefing at 4 pm local time (0800 GMT), attended by officials from the housing ministry as well as those from China's top regulator and its central bank.
Hope springs eternal
Shares in Chinese developers have rallied in Hong Kong in recent days on hopes of fresh support for the sector.
On Friday, Agile Group soared 13.5 percent, CIFI Holdings gained 4.1 percent, Fantasia added 10.5 percent and Sino-Ocean Group was up 7.0 percent.
Longfor Group and China Vanke piled on more than four percent each, having jumped 15 percent and 16 percent respectively on Thursday, according to Bloomberg News.
Liu Aihua, spokesperson and chief economist of the National Bureau of Statistics, told a news conference on Friday that the country's property sector "continues to be in a period of adjustment".
The meeting comes as official figures Friday showed that property prices and sales in the country continued to slip in April.
Since then, major companies including China Evergrande and Country Garden have teetered, while falling prices have dissuaded consumers from investing in property.
Measures introduced by the central government to support the sector have so far had little effect.
In a bid to boost purchases, a growing list of urban areas have rolled back curbs on buying homes.