China’s Ministry of Housing has announced plans to renovate 1 million homes and expand financing for specific real estate projects as part of efforts to revive the struggling real estate sector. The initiative targets urban villages known for low-quality, high-density housing and outdated residential areas. Residents of these areas will primarily receive financial compensation. The whitelist policy, introduced earlier this year, aims to complete unfinished developments by expanding project eligibility and increasing bank lending, which is expected to reach 4 trillion yuan by the end of the year. (paragraph 1)(paragraph 2)(paragraph 3).
As the housing market continues to slump, the government has introduced several support measures. The People’s Bank of China recently announced a 300 billion yuan budget to lower mortgage rates, reduce down payment ratios and convert unsold homes into affordable housing ahead of an economic policy meeting to boost lending support and land rehabilitation. (Paragraph 5) (Paragraph 5) 6).
Following the implementation of these policies, major real estate indicators are beginning to show signs of improvement. The number of viewings, visits, and contracts for newly built homes is increasing, and the transaction volume of used homes is also increasing. Ni highlighted the need for pending renovations of 1.7 million homes in urban villages and 500,000 dilapidated homes. This update aims to eliminate safety risks (paragraph 7) (paragraph 8) (paragraph 9) while encouraging homeowners to purchase existing properties with compensation .
Similar to similar programs in the 2010s that boosted demand for housing in lower-tier cities, the current renewal plan is also aimed at stimulating demand in areas hit hardest by the economic downturn. This initiative will be funded through policy bank loans, special purpose bonds, and commercial financing based on appropriate project evaluations. Tax and fee relief should support projects and be financially viable to avoid increasing municipal debt (paragraph 10) (paragraph 11).
The Treasury also allowed local governments to support this effort by using special bond proceeds to purchase land and housing. Initially, within a month of the introduction of the whitelist policy, authorities in 170 cities identified more than 3,200 projects eligible for financing, resulting in a large amount of funding reaching up to 1.43 trillion yuan by September. Bank loans were generated and subsequently increased to 2.23 trillion yuan (paragraph 12). )(Section 13)(Section 14).
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