China will expand the amount of financing available for housing projects on a "white list" to 4 trillion yuan ($562 billion), officials said Thursday in Beijing's latest move to reverse a slump in the property sector amid a wider shift to easing in a bid to boost growth and reach targets.
Minister of Housing and Urban-Rural Development Ni Hong said during a news conference Thursday in Beijing that measures will also be taken to redevelop 1 million urban villages across the country. Ni stopped short of elaborating on the scale of the funding for the redevelopment.
The pledges for more financing for cash-strapped developers and urban redevelopments are part of a series of measures announced in recent weeks aimed at stabilizing a sector that plunged into crisis in 2021, dragging on broader growth in the world's second-largest economy.
The government has been redoubling efforts recently to stabilize the real estate market after a downturn triggered by a crackdown on excess borrowing. Once a bright spot in China’s economy, the property market has since become a drag.
Ni said that the housing market had "bottomed out" after three years, with October data showing a spike in property sales.
Since last year, China has implemented incremental policies to lift home buyer confidence amid concerns about persistently declining home prices, timely deliveries of homes by developers and the status of their own jobs and incomes in a fragile economy.
No official estimates have been released on the number of presold but unfinished homes. According to a Nomura report published in January, 20 million units were sold but not yet constructed.
Ni said 2.46 million new homes have been delivered since May.
In January, China announced a plan for a "white list" of projects that can receive financing to ensure that developers could complete construction and deliver homes to buyers. As of this summer, banks had approved 5,392 such projects, with financing reaching nearly 1.4 trillion yuan.
Approved loans for the "white list" projects had risen to 2.23 trillion yuan as of Oct. 16, Xiao Yuanqi, deputy director of the State Financial Regulatory Administration, said at the press conference.
China's yuan held steady against the U.S. dollar as reaction to the housing policy briefing was muted overall, traders said.
"In today's news conference, we heard about a few incremental policies on boosting home demand that were announced," said Morningstar Research equity analyst Jeff Zhang.
"The most significant directive pertains to credit support to projects on the whitelist ... We expect an acceleration in execution with more distressed developers receiving funds for home completions, which would help shore up homebuyers' confidence."
On Saturday, authorities announced that they would allow local governments to use funds from unallocated government bond quotas and to raise debt ceilings to help prop up the property market.
In late September, the outstanding mortgage rates for individual borrowers were also cut by an average of 0.5 percentage points, and the minimum down payment ratio on purchases of second homes was also lowered to 15% from 25%.
Also, in a September meeting, the politburo, a top decision-making body of the ruling Communist Party helmed by President Xi Jinping, called for further measures to stabilize the market.
Some analysts, however, say that the measures implemented so far will not be enough to solve China's property crisis in the near term.
"It’s a ticking 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 or effort they throw at it, this problem isn’t going away anytime soon."