The package is centered around Beijing’s adoption of a policy that has already been tested in a major city — asking local governments to buy unsold homes from developers and convert them into social affordable housing. It also features a reduction in mortgage interest rates and downpayment ratios, and more importantly, 300 billion yuan ($41.5 billion) in cheap central bank cash to fund state purchases of unsold properties.
The announcement last week swiftly followed an April meeting of the Politburo, China’s top ruling body, indicating that stabilizing the property sector has become a top priority for Beijing as it tries to revive growth in the world’s second biggest economy. “The policymakers recognize the urgency to prevent an outright property crisis,” said Zhaopeng Xing, senior China strategist at ANZ Research. “The new rescue plan demonstrates the policymakers’ resolution to turn things around.”
