(Bloomberg) – The Chinese government will hold a meeting with key officials on Friday morning to discuss the real estate market, including plans to clean up excess housing stock, according to people familiar with the matter.
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Senior officials from the housing ministry, financial regulators, local governments and state-run banks will attend the State Council meeting via video conference, the people said, asking not to be identified as the matter is private.
The wide range of invitees from the government and financial industry strengthens signs that China's leaders are prioritizing efforts to end the slump in the real estate market weighing on the world's second-largest economy. Shares of Chinese developers soared Thursday after Bloomberg reported that China is considering a plan to have local governments buy up millions of unsold homes.
China's State Council aims to collect opinions from stakeholders by the end of this month and finalize the draft plan in June, the people added. The Ministry of Housing did not respond to requests for comment.
The sharp decline in real estate prices is adding to the urgency. Official data on Friday showed that house prices in April recorded the steepest month-on-month decline in a decade. New home prices have fallen by 0.58% since March, and existing home prices have fallen by 0.94%. Compared to the previous year, prices for new and used properties have fallen by record.
Senior officials from the People's Bank of China, the State Financial Supervisory Administration, the Ministry of Housing and Urban-Rural Development, and the Ministry of Natural Resources announced Friday afternoon that they will attend a briefing on measures to ensure home delivery. Central Bank.
Authorities are likely to announce new policy measures to tackle the country's lingering real estate crisis at a meeting scheduled for Friday morning, Caixin News Agency reported, citing unnamed sources. . Caixin said authorities will consider ways to expand the so-called white list of supported developments to include housing projects that were previously ineligible.
Bloomberg reported on Wednesday that local state-owned companies will be asked to help buy inventory from troubled developers at deep discounts using loans provided by state banks. Much of the property will then be converted into affordable housing.
The Bloomberg China Real Estate Index rose as much as 7% in Friday morning trading, following an 11% rise on Thursday. The index has risen more than 60% since mid-April on optimism that policymakers will take further steps to stimulate markets.
Among recent measures, several big cities have lifted restrictions on home purchases to reignite demand, even as homebuyers remain concerned about prices, job security and whether cash-strapped developers will be able to supply the apartments.
If authorities proceed with the stock-reduction plan, it will mark a new phase in the government's efforts to tackle the biggest impediment to economic growth. Home sales in China plummeted by about 47% in the first four months, and the stock of unsold homes remains at an eight-year high, exacerbating the meltdown and leaving about 5 million people unemployed or facing reduced incomes. You may be exposed to danger.
Bloomberg Intelligence credit analysts Andrew Zhang and Daniel Huang estimated that China may need to spend at least 1 trillion yuan ($139 billion) to buy up unsold homes. “Several factors may influence the implementation of this measure, but any new policy is likely to be positive,” they wrote in a note.
Asking local governments to reduce the housing glut could worsen debt levels, which stood at 56% of gross domestic product as of last year. Banks will also come under pressure, as their balance sheets are already being eroded by rising bad loans and shrinking profit margins.
(Updates in 5th paragraph with the latest home price data released on Friday; 9th paragraph with market reaction.)
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