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China Steps In to Stabilize Property Market: Government Buys Apartments, Pledges Completion of Stalled Projects

Beijing, May 18, 2024 – In a move to bolster the struggling property sector, China announced a series of measures on Friday, including plans for local governments to purchase unsold apartments and a pledge to ensure the completion of stalled housing projects. This comes amid a deepening crisis in the industry, with new home prices experiencing their sharpest decline in over nine years.

The details of the government’s apartment buying program remain unclear. Reports indicate authorities will buy “some” apartments, though the specific number and allocation haven’t been disclosed. These purchased units are likely earmarked for affordable housing initiatives.

The government also vowed to prioritize the completion of unfinished housing projects. This is a significant concern, as many people in China have invested heavily in pre-sale agreements for apartments that developers have been unable to finish due to financial difficulties.

These interventions come alongside other recent measures aimed at stimulating the property market. The People’s Bank of China (PBOC) cut mortgage interest rates and lowered down payment requirements for both first-time and repeat homebuyers. Analysts believe these steps could increase demand and improve cash flow for developers.

China’s property sector has played a critical role in the country’s economic growth, but a recent slowdown has sparked concerns about a potential financial crisis. Property developers have been burdened by large amounts of debt, and a decline in buyer confidence has led to a significant inventory overhang.

The success of China’s latest efforts remains to be seen. While government intervention may provide some stability, some experts warn that a full recovery hinges on restoring long-term confidence in the market.

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