China’s central bank on Wednesday held a meeting to promote its financial support for affordable housing in a bid to accelerate sales of unsold housing stock, as a property crisis threatens growth in the world’s second-largest economy.
The central bank last month set up a 300 billion yuan ($41.4 billion) relending loan facility for affordable housing, and Wednesday’s virtual meeting hosted from the city of Jinan in eastern Shandong province is the latest effort to promote the facility among local governments and banks.
Beijing has given the nod to local state-owned enterprises, or SOEs, to buy up unsold completed homes, and the relending facility is aimed at helping them make these purchases at “reasonable prices”.
The People’s Bank of China (PBOC) said in a statement on Wednesday that the facility is aimed at speeding up sales of existing commercial housing stock in a market-oriented way.
It said the facility adds to its “whitelist” mechanism launched in January for approving housing development projects, under which local governments nominate projects and state-owned as well as commercial banks are encouraged to provide lending to the developers.
The PBOC said SOEs’ purchases of unsold homes should adhere to “voluntary participation, demand-based ordering and reasonable pricing” to ensure business sustainability, while any new local hidden debt should be strictly prohibited.
Officials from the cities of Jinan, Tianjin, Chongqing and Zhengzhou shared their local trial experiences at Wednesday’s meeting, which PBOC Governor Pan Gongsheng and Deputy Governor Tao Ling also attended in person.
Analysts and developers say the $41 billion relending facility, which could result in 500 billion yuan worth of bank financing for local SOEs, however, is unlikely to help cash-strapped developers due to the programme’s limited size and potentially low prices.
($1 = 7.2534 Chinese yuan renminbi)
