Photo: PixabayChina will help property investors by granting 1 trillion yuan ($148.2 billion) in loans to jump-start stalled development, trying to revive the debt-ridden sector and ease overall pressure on the economy.
Once a key pillar of growth, China's real estate sector has been in crisis for the past year. A growing revolt by buyers of unbuilt properties this month has put more pressure on authorities to act quickly to quell the risks of social unrest.
The People's Bank of China will first issue about 200 billion yuan of low-interest loans, about 1.75 percent annually, to state-owned commercial banks, the Financial Times learned from sources involved in the planning. Under the plan, recently approved by China's State Council, banks will be allowed to use loans from the People's Bank along with their own funds to refinance stalled projects.
Hong Kong's Hang Seng Properties stock index reversed morning losses on Thursday to gain about 1 percent on news of troubled sector lending. China, as the world's second largest economy, where the real estate sector accounts for a quarter, narrowly avoided contraction in the second quarter, with 0.4 percent GDP growth.
Citing Reuters, unnamed sources with direct knowledge of China's real estate financing issue said this week that Beijing plans to launch a real estate fund to help investors resolve its debt crisis with the aim of raising up to 300 billion yuan (44.5 billion dollars).
The central bank will support the fund, primarily by lending to the China Construction Bank. However, investors and analysts estimate that even 1,000 billion yuan of new financing will not be enough to solve all the debt problems facing the real estate sector. Beijing is scrambling to placate property buyers who are threatening to stop paying installments on unfinished apartments, prompting further turmoil among investors who make a living from pre-selling apartments, according to biznis.rs.
Private construction investors cover about 70 percent of the Chinese market, and at least half of them have liquidity problems, analysts estimate. They state that while the new financing schemes should help improve market sentiment, they will not be enough to stabilize the sector.
Investments in real estate in China fell in the first half of the current year by 5.4 percent compared to the same period in 2021, while real estate sales, by floor area, fell by 22.2 percent. New construction, also measured by floor area, decreased by 34.4 percent, according to official data.
Source: biznis.rs
