Plans to stabilise China's real estate marketFriday 7 Jun 2024
Historically, real estate has played a crucial role in China's rapid economic growth, but it also carried risks. Before the pandemic, home prices surged relative to household incomes partly because consumers preferred investing their savings in tangible assets. However, this trend has shifted. Potential buyers are holding off on purchases due to falling prices and some developers facing difficulties securing financing to complete projects. The property downturn has now persisted for three years, leading to a hollowing out of the real estate sector. Housing starts have plummeted by over 60% compared to pre-pandemic levels, and construction timber imports have declined. In response to this crisis, which has weighed on the property sector and the broader economy, Chinese authorities unveiled significant measures in May. One key initiative is the establishment of a 300 billion yuan (US$41.5 billion) fund to support affordable housing. The aim is to assist local state-owned enterprises in purchasing unsold homes. Estimates suggest that China has nearly four million empty apartments and approximately 10 million homes sold but not ready for occupancy. Other measures include reducing the deposit requirements for homebuyers and encouraging local authorities to buy unsold properties. However, there are concerns that local governments, already burdened with substantial debt, may not be able to absorb these unsold properties, valued at nearly US$4 trillion. While the full scope of the Chinese government's initiative to address the real estate crisis remains to be seen, the significant investment being made to boost sales and complete partially built homes is likely to result in increased timber imports. More >> Source: ITTO TTM Report: Volume 28 Number 10 16th – 31st May 2024 | ||
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