China’s leadership has given the green light to a set of guidelines aimed at enhancing the construction and planning of affordable housing, as reported by state media outlet Xinhua news agency. The decision was reached during a meeting chaired by Premier Li Qiang.
The Chinese property sector is currently grappling with a deepening crisis, marked by an increasing risk of default among certain developers who are struggling to sell properties and raise necessary funds.
While specific details of the new cabinet guidelines were not disclosed by Xinhua, the agency did highlight that the cabinet emphasized the intention to expand investments and foster the healthy progression of the property market.
In a separate move, China’s central bank introduced new guidelines that seek to ease regulations around residential housing loans. This initiative is designed to encourage more applications for housing loans and, consequently, bolster house purchases.
The People’s Bank of China indicated that individuals without a home registered in their name at the location of purchase will be treated as first-time homebuyers, regardless of whether they have previously taken out a loan for a home acquisition.
Furthermore, the central bank reiterated its commitment to the principle that homes are meant for habitation rather than being vehicles for speculation.
In recent years, Beijing has been actively promoting the creation of more affordable housing, a response to skyrocketing home prices in major urban areas that have made it difficult for many young individuals to enter the property market. This push has gained even more significance in light of the property sector’s debt crisis and weakening economic growth.
In the past year, an official from the Ministry of Housing and Urban-Rural Development disclosed that China was planning to add 6.5 million new units of low-cost rental housing in 40 major cities between 2021 and 2025.
However, due to the downturn in the property market, official data indicates that new home prices experienced their first drop of the year in July, underscoring the urgency for more robust policy support.
On the same day, the housing ministry, the central bank, and the national financial regulator jointly issued a notice that relaxes mortgage policies, aiming to inject vitality into the struggling sector.
Over the past couple of years, China’s housing market has grappled with a significant debt crisis, which was initially triggered by government efforts to curb surging debt levels.
In another development, the cabinet’s approval also encompassed plans for the development of the pharmaceutical and medical equipment industries from 2023 to 2025. The objective is to expand the nation’s capacity to supply high-end medications and essential technologies, according to Xinhua.
