BEIJING — China cut the minimum down payment rate for first-time homebuyers recently and suggested the government could buy up commercial real estate, in some of Beijing's most ambitious moves yet to lift the ailing housing market out of an unprecedented debt crisis.
Property and construction accounts for more than a quarter of gross domestic product, but the sector has been under unprecedented strain since 2020, when authorities tightened developers' access to credit in a bid to reduce mounting debt.
Since then, major companies including China Evergrande and Country Garden have teetered, while falling prices have dissuaded consumers from investing in property.
Under mounting pressure to boost the ailing market and ensure millions of unused homes go to those in need of housing, Beijing convened a video conference Friday, state news agency Xinhua said.
Friday's meeting was attended by regulators, representatives of top banks, local governments and the property market, Bloomberg News reported.
"Great efforts should be made to promote the handling of commercial housing projects classified as under construction that have been sold and are facing difficulties to deliver," Vice Premier He Lifeng told the meeting, according to state media.
"In cities where there is a large inventory of commercial housing, the government can place orders and purchase some of the commercial housing at reasonable prices as appropriate to use as affordable housing," he added.
No details were provided on how many houses would be bought.
'Unexpected and positive'
"Relevant local governments should... properly handle transferred idle residential properties through retaking, acquisition... to help housing companies with financial difficulties solve their challenges," He said.
State media also reported, citing the central bank and the National Financial Regulatory Administration, that they would cut the minimum down payment rate for first-time homebuyers to 15 per cent, one of the country's lowest-ever rates.
The rate will be cut to 25 per cent for second-home purchases, it added.
The moves are some of Beijing's most ambitious yet in seeking to reverse a chronic crisis in the housing market.
"This is the lowest down payment requirement and the lowest mortgage interest rate in history," Yan Yuejin, research director of the Yiju Research Institute, told AFP.
"These policies send very bullish signals and will be very helpful in boosting market moods," he added.
"We are very optimistic about the potential effects they will have on boosting the real estate market."
During a State Council briefing Friday afternoon attended by officials from the housing ministry as well as those from China's top regulator and its central bank, officials pointed to "significant difficulties" in the market.
"Significant changes have taken place in the supply and demand dynamics of the property market," said Dong Jianguo, deputy head of China's housing ministry, adding that the sector "is in the process of adjustment".
The briefing also saw central bank Deputy Governor Tao Ling announce that the government would set up a loan scheme for low-income housing totalling over $41 billion.
Shares in Chinese developers have rallied in Hong Kong in recent days on hopes of fresh support for the sector.
Jeff Zhang, an analyst at Morningstar Inc. in Hong Kong, told Bloomberg Friday's move was "unexpected and positive for property stocks".
'Stabilisation plan'
Agile Group soared 23 per cent and Fantasia added 8.3 per cent Friday, while Sino-Ocean Group and CIFI Holdings each gained more than 12 per cent.
Longfor Group added 10 per cent and China Vanke piled on 19 per cent each, having jumped 15 per cent and 16 per cent respectively on Thursday, according to Bloomberg News.
The meeting comes as official figures on Friday showed that property prices and sales in the country continued to slip in April.
Further economic data showed that industrial production picked up last month, but consumption continued to slow.
China on Friday also issued around $5.5 billion in ultra-long treasury bonds, Xinhua said, the first batch of a planned sale of nearly $140 billion in such bonds this year.
Measures introduced by the central government to support the sector have so far had little effect.
But HSBC economists wrote in a note that, with Friday's announcement: "China's property stabilisation plan is underway."
"The quicker and bolder the intervention plan, the more effective it will be, in our view," they said.
