In a move to boost the completion of unfinished homes and stabilize the declining real estate sector, China is set to nearly double its loan quota for “white-list” property projects to 4 trillion yuan. This increase from the current 2.23 trillion yuan, as of October 16, was announced by Housing Minister Ni Hong and other officials during a briefing on Thursday.
The announcement led to a drop of over 8% in a Bloomberg property stock gauge in Hong Kong, with Chinese stocks retracting earlier gains in a disappointment from the market that was expecting for more extensive measures.
The “white-list” initiative is part of a comprehensive strategy to ensure the timely delivery of unfinished homes to buyers and prevent a repeat of widespread mortgage defaults. The completion of China’s estimated 48 million unsold but unfinished homes will necessitate approximately 3 trillion yuan in direct funding from the central government, as reported by Nomura Holdings Inc.
Ni expressed optimism about the stabilization of China’s residential market, affirming the government’s determination to reverse the downward trend in real estate prices.
In addition to the increase in the loan quota for “white-list” projects, China is contemplating permitting banks to provide loans for the purchase of idle land and expanding support for affordable housing for families with two or more children. The government also plans to renovate one million homes in dilapidated areas of major cities. This initiative builds on prior efforts to upgrade substandard housing, albeit on a smaller scale compared to initiatives undertaken between 2016 and 2018.
Previously, in late September, China introduced a stimulus package to bolster the troubled property sector. Measures included reducing borrowing costs on up to $5.3 trillion in mortgages and easing regulations on second-home acquisitions. People’s Bank of China Deputy Governor Tao Ling estimated that approximately 50 million households would collectively save 150 billion yuan in mortgage expenses following the initiative announced during the briefing session.
