China will pour money into two schemes to pull the property market out of crisis
China (CHN) plans to take a page from Singapore's (SGP) social housing model (HDB flats) in a bid to end the ongoing slump in the property market.
In recent weeks, Beijing has put two "big projects" at the center of its housing policy: the construction of social Public housing/affordable housing, and the renovation of super-large urban rundown areas (Public Sector Linkage, PSL). These projects may soon receive an initial infusion of Rmb1tn in funding, along with more other policy support.
The social public housing project is expected to involve 35 cities in the pilot, the details of the plan have not been made public. But the gist seems clear: the homes will be sold to the government, which will sell them to qualified residents in strict accordance with regulations. Ideally, low-income earners can own a home in the city at little cost, while high-income earners can continue to buy or invest in property in the market.
Betty Wang, senior China economist at ANZ, said: "The plan is more the start of a long-term restructuring of the property sector towards the Singapore model. I don't think this is just a short-term effort to boost real estate investment - rather, it's about China's shared goal of prosperity by 2035."
"The public housing plan is seen as a major attempt at real estate reform in China and could change the balance between public and private housing," said Christie Hong, an analyst at Bloomberg Intelligence.
Rosenna Yao, an analyst at Gavekal Research, said: "The timing of social public housing in 35 cities could mean the start of 150 million square metres of new homes per year. This will help drive a 10 per cent increase in new property floor space starts in 2024, reversing the 23 per cent plunge seen so far this year."
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