In Beijing and Hong Kong on February 21, Reuters reported that China's efforts to stabilize the property market through key tools introduced last year have had minimal impact. This has put pressure on Beijing to seek new solutions for the crisis-hit sector, including substantial state purchases of empty apartments.
One of the initiatives, a 300 billion yuan ($41.4 billion) relending program announced by the People's Bank of China in May 2024, aimed to support loans for local government-controlled firms to purchase and repurpose empty homes. However, as of September, only 16 billion yuan had been utilized from the facility.
Analysts note that challenges exist for state-owned firms in implementing the scheme effectively. As reducing housing inventory is crucial for the property sector's recovery, some economists suggest replacing or supplementing the current tool with fiscal interventions.
Recent data on the program's effectiveness was anticipated in the PBOC's quarterly report, but its absence has raised concerns about its efficacy. Critics suggest that the tools may not be able to address the issue of excess housing inventory, which continues to impact prices and construction activity negatively.
In light of falling prices and diminishing rental returns, analysts underscore the need for significant reforms, emphasizing the importance of revamping the real estate sector to avert deflation. Suggestions include reducing the stock of unsold homes and adopting fiscal measures unconstrained by financial returns potential.
Efforts to address the property market crisis face challenges due to financial constraints and low investment returns. In this complex landscape, experts emphasize the necessity of bold measures to address housing oversupply effectively.