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China launches 'Historic' rescue plan for troubled property sector amid falling home prices

China launches 'Historic' rescue plan for troubled property sector amid falling home prices

Posted on May 20, 2024   |  

China has launched major measures to support its property sector, asking local governments to buy unsold homes from developers and easing purchase rules.

Although China’s economy grew faster than expected early this year, real estate remains a weak spot, previously accounting for up to 30% of economic activity.

The People’s Bank of China (PBOC) will offer a national program with 300 billion yuan ($41.5 billion) in loans for state purchases of unsold homes.

This 300 billion yuan loan could support up to 500 billion yuan ($69 billion) in credit for these purchases.

News of Beijing's plan for local governments to buy unsold homes has boosted Chinese stocks, with more investors returning since last month.

China’s local governments have accumulated $15 trillion in debt, largely hidden, due to borrowing for pandemic and infrastructure spending.

Despite efforts over the past two years, China's property investment fell by 9.8% in the first four months of 2024, with new home prices dropping for the 10th consecutive month in April, the fastest decline since November 2014



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