China Moves to Boost Affordable Housing, Home Loans Amid Crisis

Chinese officials made multiple moves on Friday to boost home-buying in the country, amid a deepening property crisis that threatens to derail an already faltering economy.

China’s cabinet on Friday approved guidelines for planning and construction of affordable housing at a meeting chaired by Premier Li Qiang, state media Xinhua news agency reported.

Separately, China’s central bank announced guidance on relaxing residential housing loan rules, in a move aimed at boosting loan applications and house purchases.

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Xinhua didn’t give details of the new cabinet guidelines for affordable housing. But it cited the cabinet as saying they would expand investment and promote the healthy development of the property market.

The People’s Bank of China, meanwhile, said that banks should treat those without a house in their names at the location of a purchase as first-time home buyers, regardless of whether they have previously used a loan for a home purchase.

The central bank also said it would stick to the principle that houses are for living in and not vehicles for speculation.

On Friday, the housing ministry, the central bank and the national financial regulator also jointly issued a notice easing mortgage policies to help revive the realty sector.

The moves come amid rising calls for greater state intervention as the Chinese property sector deals with an increasing risk of default among some developers struggling to sell apartments and raise funds.

The real estate sector accounts for roughly a quarter of the world’s second-largest economy and is estimated to be saddled with more than 50 million unsold or empty apartments.

Affordable housing push

Beijing has been promoting more affordable housing in recent years as runaway home prices in major cities shut out many young buyers.

The plan has assumed greater significance in the wake of the debt crisis in the property sector and weakening economic growth.

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An official at the Ministry of Housing and Urban-Rural Development said last year that China would add 6.5 million new low-cost rental housing units in 40 major cities in 2021-2025.

However, with the property downturn, official data showed new home prices fell in July for the first time this year, underlining an urgency for bolder policy support.

China’s housing market has over the past two years been grappling with a severe debt crisis – initially triggered by government moves to rein in ballooning debt.

Hong Kong property agency owed millions in commissions

Meanwhile, one of Hong Kong’s largest property agencies Centaline Property said on Friday its mainland China unit was owed a huge amount of unpaid commissions.

Responding to reports of delayed payments to the unit by developers including the embattled Evergrande, Centaline said “the current amount of unpaid commissions from developers and agents is huge.”

The agency did not give a figure for the unpaid commissions but state-owned Securities Times reported on Monday that the mainland unit was owed more than 1 billion yuan ($137.19 million) in commissions.

Centaline said that all of units were operating normally and it would not withdraw from the mainland China market. It added, however, the company was operating under major pressure.

• Reuters, with additional editing by Vishakha Saxena

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