40
KEY TAKEAWAYS
- China has rolled out its strongest measures so far to fix its broken housing market.
- Beijing is easing mortgage rules and pushing city and local authorities to buy up unsold homes to be converted into affordable housing.
- Still, it is unclear how the cash-strapped local governments will get enough funding to pay for the acquisitions.
China has rolled out its strongest measures so far to fix its broken housing market, easing mortgage rules and pushing city and local authorities to buy up unsold homes to be converted into affordable housing.
It is unclear, however, how the country’s cash-strapped local governments will get enough funding to pay for the acquisitions.
The People’s Bank of China, the country’s central bank, removed the floor on mortgage rates while cutting the minimum down-payment ratio.
It is also supplying government-backed firms with 300 billion yuan ($42 billion) of funding to buy excess inventory from developers, according to Bloomberg.
China’s housing downturn has sapped consumer spending, and the country has boosted exports to pump up growth, sparking allegations from the U.S. it is dumping excess capacity .
Ratings agencies have been downgrading their outlook on China amid the real estate slowdown. Last month, Fitch Ratings downgraded its outlook for China to “negative” from “stable,” citing increasing risks to the country’s public finances as it moves away from an economy reliant on property. The downgrade follows a similar move by fellow ratings agency Moody’s Investors Service in December.