Chengdu scraps home purchase qualifications to support housing market

Posted by Admin April 28, 2024 Bussiness

Chendu, the capital of Sichuan province, also plans to reduce land supply in areas where the supply of residential and commercial properties exceeds demand, while also encouraging market players to convert spare and idle non-residential housing into low-rent homes, it said. These changes well be effective Monday.

The city, which has a population of 21 million and is viewed as second-tier, is the latest to roll out stimulus measures to buttress the property market at a local-government level. While home sales in the city increased by almost 10 per cent last year to buck a nationwide slump, it got off to a low start in 2024, with sales falling 35 per cent month-on-month in January due to weak demand.

It has joined the list of other top-tier cities including Beijing and Shanghai, which eased curbs on their property market earlier through steps such as cuts in mortgage rates and by lowering the bar for home purchases.

Brace for ‘third wave’ of China bond defaults on financing costs, tighter policies: S&P

New homes in Chengdu will no longer be sold through lucky draws and developers can arrange the sales on their own, the local housing administration said, a move that suggests the government is ready to scrap a cap on new home prices.

Property was a pillar of China’s growth not so long ago. But, while China’s economy expanded by a faster-than-expected pace of 5.3 per cent in the first quarter of this year, its property market remains a key hindrance to growth.

Home prices in the country’s major cities dropped for a 10th straight month in March, according to the statistics bureau, indicating that more is still needed to be done to revive demand.

Chinese tycoon Chen Hongtian faces demands from banks on overdue property loans

Even the industry’s biggest players are not immune to the downturn. China Vanke, the country’s biggest developer by market value, surprised investors last month by reporting a 46 per cent profit decline for 2023 and skipping the dividend payout for the first time on record. Its bonds suffered from sell-offs on heightened concerns about its debt-servicing ability.

The company has two offshore bonds totalling 5.6 billion yuan (US$772.8 million) maturing in 2024, according to S&P Global Ratings. Another 7.3 billion yuan in onshore bonds becomes due or puttable this year.

“China’s economy is unlikely to bottom out so long as its property sector remains in decline,” Lu Ting, the chief China economist at Nomura Holdings said in a report last week. “Without a stabilisation of the property sector, the rebalancing via exports and consumption … are unlikely to progress very far.”

Beijing might eventually need to fund the completion of unfinished residential projects that have stalled due to a funding crunch, as the ultimate resolution to the housing crisis, which could rebuild confidence in developers and banks and increase demand for raw materials, workers and home appliances, he said.