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CHINA: Region’s Purchase of Unsold Properties Moving Slowly.

CHINA
  • Earlier this year China’s central government advocated for regional cities to purchase unsold homes, estimated to be in the region of 380 million square meters of excess inventory.
  • The central government asked up to 200 cities to purchase these unsold homes yet, only 29 cities have begun the process.
  • Recently the chairman of the Real Estate Information Platform Shanghai CRIC Info Tech wrote in an August report that “Local Governments have made slow progress (in the purchase of unsold properties).”
  • Regional governments, coming to grips with new independence from the Central Government, are listening to these demands whilst balancing the costs of implementation, it appears.
  • Regional government budgets have been under enormous pressure following the significant drop of income from land sales, given the decline in the housing sector.   
  • Since the PBOC announced the CNY300bn lending program it has been widely recognized that the need for states to purchase unsold properties is critical to finding a solution, yet the take up of the program (according to published data in June) is less than 10%.
  • The reality may be that further policies may be needed to clear the backlog of unsold properties or that the current policy be redefined.   

 

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