China is fixing housing market with a long gaze
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Chan Ka Sing
HONG KONG, Aug 29 (Reuters Breakingviews) -China’s plan to resolve its property mess is off to a slow start. Only 4% of a 300 billion yuan ($42 billion) relending scheme to help mop up residential inventory has been drawn by local governments and state firms, central bank data shows. Meanwhile policymakers last week recommittedto drastic reforms which could exacerbate the industry's slump. Beijing is determined toremodel the sector, even if it requires more time and pain.
Hopes were high when China announced “historic” steps in May to tackle its housing crisis. Local governments were encouraged to buy unsold residences from developers and turn those into public housing. According to state media more than 80 cities have announced plans aimed at destockingsupply. The problem is only a handful of cities, such as Chongqing and Fuzhou, have actually made purchases, with fewerthan 10,000 apartments in total.
On first glance, this is too little andtoo slow. The People’s Republic has to pour in about 2 trillion yuan to mop up 10% of the supply glut nationwide if it is to put a floor underslumping prices, Goldman Sachs analysts estimated in a June report based on housing data in 80 cities. In a recent note, UBS analysts lowered their 2024 GDP growthforecast to 4.6% from 4.9%, citing a property downturn that's yet to bottom, among other factors. One issue is thatofficials are grappling with profound market changes and need time to assess their impact.
Local governments, for example, now have more power to set their own housing market rules, such as removing price caps on new projects. There may also be more policy support coming. Beijing is planning to allow local governments to fund their home purchases by issuing more special bonds, Bloomberg reported this month, citing unnamed sources.
Yet China is also using the crisis to roll out changes that ought to make the property sector a more stable feature of the $17 trillion economy.In a press conference last week, the housing ministry reiterated it will accelerate a transition away from the current presalesystem, where developers sell uncompleted housing projects to homebuyers, and towards a "sales upon completion" approach.
It will slow the recovery for distressed developers including ChinaEvergrande 3333.HK and Country Garden 2007.HK, and the overhaul could weigh on household sentiment as the industry settles into a new normal. Either way, a quick boom after the bust seems unlikely.
CONTEXT NEWS
More than 80 cities have announced plans to acquire unsold homes from the private residential market, but only a handful of local governments have actually made purchases so far, The Paper, a state-run news website, reported on Aug 25.
The People’s Bank of China announced in May a 300 billion yuan relending programme to support housing stock purchases, but only 12.1 billion yuan has been drawn, according to the central bank’s latest quarterly report.
In a press conference on Aug 23, China’s housing ministry said it will push for a transition from the current presalemodel, where developers sell residential projects before completion, to a “sales upon completion” model.
Graphic: Chinese property stocks are slumping again https://reut.rs/3MoQ4Ok
Editing by Una Galani and Aditya Srivastav
Últimas noticias
Descargo de responsabilidades: Cada una de las entidades de XM Group proporciona un servicio de solo ejecución y acceso a nuestra plataforma de trading online, permitiendo a una persona ver o usar el contenido disponible en o a través del sitio web, sin intención de cambiarlo ni ampliarlo. Dicho acceso y uso están sujetos en todo momento a: (i) Términos y Condiciones; (ii) Advertencias de riesgo; y (iii) Descargo completo de responsabilidades. Por lo tanto, dicho contenido se proporciona exclusivamente como información general. En particular, por favor tenga en cuenta que, los contenidos de nuestra plataforma de trading online no son ni solicitud ni una oferta para entrar a realizar transacciones en los mercados financieros. Operar en cualquier mercado financiero implica un nivel de riesgo significativo para su capital.
Todo el material publicado en nuestra plataforma de trading online tiene únicamente fines educativos/informativos y no contiene –y no debe considerarse que contenga– asesoramiento ni recomendaciones financieras, tributarias o de inversión, ni un registro de nuestros precios de trading, ni una oferta ni solicitud de transacción con instrumentos financieros ni promociones financieras no solicitadas.
Cualquier contenido de terceros, así como el contenido preparado por XM, como por ejemplo opiniones, noticias, investigaciones, análisis, precios, otras informaciones o enlaces a sitios de terceros que figuran en este sitio web se proporcionan “tal cual”, como comentarios generales del mercado y no constituyen un asesoramiento en materia de inversión. En la medida en que cualquier contenido se interprete como investigación de inversión, usted debe tener en cuenta y aceptar que dicho contenido no fue concebido ni elaborado de acuerdo con los requisitos legales diseñados para promover la independencia en materia de investigación de inversiones y, por tanto, se considera como una comunicación comercial en virtud de las leyes y regulaciones pertinentes. Por favor, asegúrese de haber leído y comprendido nuestro Aviso sobre investigación de inversión no independiente y advertencia de riesgo en relación con la información anterior, al que se puede acceder aquí.