The Housing and Urban-Rural Development Bureau of the technology hub’s Linan district said it would buy housing units and car parking spots. The units will not exceed 70 square metres (753 sq ft) and the price will be based on the prevailing market rate, the bureau said in a notice on Tuesday.
The procurement process will run from May 15 to May 24, and the total floor area to be bought will be capped at 10,000 square metres, the bureau said, adding that the selected developers will not be allowed to sell on the open market.
“This move shows that the ‘national team’ is trying to implement the Politburo meeting’s call to ‘digest existing housing inventory’ and ‘optimise new housing’,” said Yan Yuejin, a director at the Shanghai-based E-house China Research and Development Institute. “The initiative also sheds light on how to absorb the projects that developers have built.”
10:57
Boom, bust and borrow: Has China’s housing market tanked?
Boom, bust and borrow: Has China’s housing market tanked?
This approach is different from recent moves to relax restrictions around housing purchases, as it depends on the fiscal capacity of local governments, Yan added.
After the Politburo meeting on April 30, China’s top leaders said they were assessing comprehensive measures to reduce the housing inventory and boost sales.
Last week, Hangzhou, the headquarters of Alibaba Group Holding and carmaker Geely, and Chengdu, the capital of southwest Sichuan province, lifted all curbs on home purchases.
The latest move by Hangzhou’s Linan district coincides with a report by Bloomberg, which cited unnamed sources on Wednesday that the State Council, China’s cabinet, was soliciting feedback for a preliminary plan under which state-owned enterprises will be tasked with purchasing unsold homes from distressed developers with loans from state-backed banks.
This would be the most ambitious plan to bolster the country’s slumping property market since an industry-wide downturn began in late 2020.
However, it remains to be seen whether China’s local governments have the capacity to digest the excess inventory.
Official data shows that the area of unsold homes stood at 3.6 billion square feet in 2023, the most since 2016, while a report from Tianfeng Securities suggested that it would cost upwards of 7 trillion yuan (US$969 billion) to absorb this inventory.
Chinese property stocks responded positively. China Vanke rose 3.6 per cent to 7.73 yuan and Poly Developments and Holdings Group added 3 per cent to 9.92 yuan on Wednesday.
Prices of new homes in China’s 70 medium and large cities fell for a 10th consecutive month in March, dropping 0.3 per cent from February, according to official data. Contracted sales by the nation’s top 100 builders tumbled 49 per cent in the first quarter of 2024 compared with the previous year, according to China Index Academy.