BEIJING – China pledged to give city governments more say in how they buy unsold homes, as part of efforts to stem an unprecedented property decline.
The central government will allow local officials more leeway in setting standards on which unsold homes to purchase, according to a government work report to the national Parliament on March 5.
They will also have more autonomy on deciding the acquisition price and future usage of such property.
China is trying to put a floor under the real estate meltdown amid weak domestic demand and a worsening job situation.
While the housing sector has picked up modestly on the back of government support, improvements have mostly been in the resale market, as buyers remain concerned about developers’ ability to finish projects on time.
The government vowed to “fully unleash the demand” of buyers who are in need of homes or seek to improve their housing conditions.
It also pledged to “effectively prevent debt defaults by real estate companies”, signalling a further shift towards aiding the industry. Previously it had singled out “quality top developers”.
China’s property crisis has led to dozens of defaults and created a nearly US$160 billion (S$214 billion) pile of distressed debt.
One developer to receive state intervention recently is China Vanke.
Faced with a collapse in the company’s bond prices and its warning of a record US$6.2 billion loss, officials from the builder’s home town in Shenzhen in late January stepped in to take operational control.
Other developers continue to struggle. Country Garden Holdings posted a 38 per cent drop in sales in February from a year earlier. The builder, once China’s largest, is counting on a turnaround in sales to secure support for its restructuring and fight off liquidation. BLOOMBERG
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