China is looking into purchasing millions of unsold homes in the country, as the Communist Party government attempts to clear up the housing inventory, media reports said on Wednesday. The officials are considering a plan to control the piling real estate inventory.
According to a report by Bloomberg citing sources familiar with the issue, the State Council is collecting feedback on the preliminary plan from several local provinces and government bodies.
Notably, the real estate sector in China has been struggling for some years now, due to a debt crisis amongst the developers. Multiple policy measures have been unable to lift the sector back up in the last 2 years and in turn, the slump has impacted consumer spending and confidence in the economy. The sector reportedly accounts for a fifth of the Chinese economy.
Lenders have been hesitant to help the sector and boost credit in the industry in fear of more bad loans. The Politburo of the Communist Party said in its meeting in April that it will work to improve the policies to manage the housing inventories.
As part of the measures, multiple cities have also provided subsidies to attract residents to shift to new apartments from their old dwellings, in hopes of offloading the increasing stock of new homes and also providing some cash to the affected developers.
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The report noted that local state-owned entities would be urged to help acquire unsold homes from struggling developers at major discounts using loans offered by state banks.
Currently, the authorities are discussing the feasibility of the plan and details. Even if the plan is finalised, it could take months for things to progress, the report stated. The housing ministry didn’t share any comments on the issue, it added.