HONG KONG (AP) – In its latest move to reverse the downturn in the real estate industry, the Chinese government has reduced the amount of loans available for “whitelisted” housing projects to 4 trillion yuan (562 billion yuan). authorities announced on Thursday.
Housing and Urban-Rural Development Minister Ni Hong said at a press conference in Beijing on Thursday that steps would also be taken to redevelop the country’s 1 million urban villages. Mr. Nee could not elaborate on the size of the redevelopment funding.
He said the housing market had “hit bottom” for the first time in three years, and data for October showed a surge in property sales.
In recent weeks, the government has stepped up efforts to stabilize the real estate market, which has slumped due to a crackdown on excessive borrowing. Once a bright spot for China’s economy, the real estate market has since become a drag.
Authorities announced Saturday that local governments will be allowed to use funds from unallocated national bond facilities to prop up real estate markets and raise debt limits.
In late September, interest rates on home loan balances for individual borrowers were lowered by an average of 0.5%, and the minimum down payment ratio for purchasing a second home was also lowered from 25% to 15%.
In January, authorities announced a list of housing projects eligible for financing. Loans for such projects reached 2.23 trillion yuan ($313 billion) as of Wednesday, said Xiao Yuanchi, deputy director of the State Financial Supervisory Administration.
However, some analysts say the measures taken so far are not enough to resolve China’s property crisis in the short term.
“This is a time bomb that will take years, maybe even decades, to defuse,” said Stephen Innes, managing partner at SPI Asset Management. “No matter how much money and effort they put into this problem, it’s not going to go away anytime soon.”
