‘Disappointing’: China’s US$42 billion plan to buy up unsold homes rolls out slowly

Name: SCMP
Telephone: +852-2680-8888

Only about five cities have made purchases so far, according to a China Real Estate Information Corporation (CRIC) report

Reading Time:3 minutes

Why you can trust SCMP

Residential buildings in Chengdu, China, pictured on August 19, 2024. Photo: Bloomberg

Yulu Ao

Published: 7:30am, 22 Aug 2024Updated: 10:58am, 22 Aug 2024

Slow implementation is hampering China’s 300 billion yuan (US$42 billion) plan to have local governments buy up unsold flats to help troubled developers, blunting the effect of a programme that was already seen as too limited to improve the fortunes of the country’s troubled property sector, according to analysts.

While a growing number of Chinese cities have said they will support the plan following Beijing’s announcement of the relending facility in May, precious little progress has been made, with only about five cities actually making purchases so far, according to a China Real Estate Information Corporation (CRIC) report on Monday.

“The impact relies on implementation and execution, but so far the policy-implementation is very slow, as we learned from talks with some top Chinese developers,” said Dong Jizhou, an analyst with Japanese investment bank Nomura.

“The disappointing progress compounded by lacklustre economic data sets has dragged homebuyers’ sentiment a lot. More bolder measures are needed amid a deteriorating economic environment, if you want to have the effect you expected.”

About 30 Chinese cities have announced details of the scheme and requirements for purchasing unsold flats, according to CRIC data.

China’s technology hub Shenzhen joined the list of participating cities earlier this month, becoming the first of mainland China’s four tier-one cities to do so. Five more major cities – Nanjing, Hangzhou, Tianjin, Chengdu, and Qingdao – are mulling policies or details for purchases, state-owned newspaper Securities Times reported on Friday.