CALL FOR EXTRA EFFORTS TO LIFT PROPERTY SECTOR
Vice-Premier He Lifeng urges on-time delivery of new homes and financing support for developers as industry remains a drag on economic recovery
Vice-Premier He Lifeng urged the on-time delivery of properties and financing support for developers at a meeting over the weekend, rallying efforts to revive a sector critical for this year’s economic growth target and for financial stability.
The property sector once contributed about a quarter of the national economic output, but it has yet to bottom-out in terms of investment and sales, while market confidence remains weak.
“We must understand the property sector is critical,” He told local officials, developers and bankers in Zhengzhou, Henan province, during a two-day inspection tour. “There must be dedicated funding coordination mechanisms to expeditiously loan to all the projects that meet the ‘whitelist’ requirements for timely completion and delivery.”
The whitelist was launched by the housing ministry at the start of the year, with provincial governments asked to recommend to banks local residential projects that are deemed financially sound and fit for further loan support.
He also vowed to uphold the rights of homebuyers to stabilise expectations and the development of the sector, ordering stricter scrutiny of loans and presale accounts that are supervised by the government to prevent misappropriation, according to Xinhua.
Zhengzhou is among the cities grappling with a large number of abandoned or stalled residential projects, with homebuyers seeking either a refund of their down payment or access to their new homes.
While pushing for more developers to be added to the whitelist, He also requested targeted solutions for projects that have not yet qualified.
“[Beijing has to] ensure that, when other key sectors like exports are already recovering this year, the overall economic development trend should not be held back by prolonged property sector distress,” said Li Xuenan, a finance professor at the Cheung Kong Graduate School of Business.
The government is looking for consumption and technology to drive economic growth this year, but such a transition would take time, Li added. “More funding to ensure delivery of new homes also matters to social stability and helping people to spend more,” she said.
The top leadership is anxious to resuscitate the property sector after the industry became one of the biggest drags on the economic recovery amid the effort to attain this year’s growth target of “around 5 per cent”.
He’s trip came ahead of the release of first-quarter economic data, including gross domestic product and investment, with initial signs that the economy had picked up at the start of the year.
Problems facing developers, though, remain, with investment having slumped by 9 per cent year on year in combined figures for January and February, contrasting with the 4.2 per cent increase in total fixed-asset investment.
Total home sales also plunged 29.3 per cent year on year to a little more than 1 trillion yuan (HK$1.1 trillion) in the same period.
In 2023, property investment fell by 9.6 per cent, while sales dropped by 6.5 per cent, despite cuts to mortgage and deposit rates. The slowdown also sliced 0.7 percentage points off economic growth last year, according to the Bank of China.
Since the downturn in 2020, there has been a spate of projects, undertaken with bank loans and down payments from buyers, that have failed when developers collapsed or defaulted. Nomura estimated in November there were 20 million units of unconstructed and delayed pre-sold homes in 2022, with 3.2 trillion yuan needed for completion.
A report by the Shanghaibased E-House consultancy said 3.85 per cent of all projects across the country had financial woes last year, totalling 231 million square metres.
More funding to ensure delivery of new homes also matters to social stability LI XUENAN, ACADEMIC