China said Thursday it would boost credit available for unfinished housing projects to more than $500 billion as it unveiled another round of measures to shore up the sector and try to reignite the economy.
The real-estate sector has long accounted for around a quarter of gross domestic product and experienced dazzling growth for two decades but a years-long housing slump has battered growth as authorities eye a target of around five percent for 2024.
At a briefing on Thursday, housing minister Ni Hong offered fresh help, saying Beijing will “increase the credit scale of white-list projects to four trillion” yuan ($562 billion) by the end of the year.
The “white list” scheme, announced earlier this year, pushes local authorities to recommend housing projects for financial support and work with banks to ensure their completion.
“The urban real-estate financing coordination mechanism should strive to include all eligible real-estate projects in the white-list,” Ni said.
“An additional one million worn-out homes… will be renovated,” he added. “There are many safety hazards and poor living environments in urban villages, and people are eager to renovate.”
The move, he said, would “be conducive to absorbing the existing stock of commercial housing”.
China’s leadership last month warned the economy was being plagued by “new problems” as officials unveiled a raft of stimulus in one of the biggest drives to boost growth for years.
Among the measures were a string of interest rate cuts, the loosening of restrictions on home-buying and moves to free up cash for banks to lend more.
– Investors ‘not thrilled’ –
On Thursday, Beijing said it estimated that “existing mortgage rates will fall by an average of about 0.5 percentage points” under those cuts.
That, central bank deputy governor Tao Ling said, would “save 150 billion yuan in interest expenditure overall, benefitting 50 million families and 150 million residents”.
A blistering market rally fuelled by hopes of major stimulus has faltered as authorities refrained from providing a specific figure for the bailout or fleshing out any of the plans.
A number of major cities have also in recent months eased house buying restrictions — most recently this week in Chengdu, the capital of southwestern province of Sichuan, and the northern port city of Tianjin.
The latest announcement comes as China prepares to release third-quarter growth data Friday, which is forecast to be the slowest this year.
And analysts were unconvinced that Thursday’s briefing would do much to sway the markets.
“They’re still trying to talk the talk, with more noise about stabilising the property market,” Stephen Innes, Managing Partner at SPI Asset Management, said in a note.
“As the briefing rolled on, it was clear: traders were not thrilled,” he said.
“Let’s be honest, though — China’s property mess isn’t something that can be patched up with a few speeches and half-baked measures,” Innes added.
Shares in Shanghai and Hong Kong were up in the morning but well off earlier gains, with property firms well in negative territory.
Analysts surveyed by AFP predict 4.9 percent overall growth in 2024 — even worse than last year, which was the weakest in decades outside of Covid.
Still, Beijing has said it is “fully confident” it will reach its five percent goal.
China is due to release its latest growth data on Friday.
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