7 Provinces Launch Govt Homebuying Schemes

I covered the launch of Fuzhou's bailout plan here: Chinese Governments Get Serious About Bailouts and Growth. Six other provinces have cities that have launched bailout plans involving the direct purchase of private homes: Sichuan, Anhui, Jiangsu, Liaoning, Inner Mongolia and Guizhou. Governments are trying to find ways to digest 600 million sqm in empty homes and the need to provide 7 million affordable homes. Since the Ministry of Housing plans to spend about ¥500 billion on shantytown renovations this year, and 40% can be used for relocation, this equals ¥200 billion for home purchases, equal to roughly 1 million homes.

For example, the government took the financial Appropriations, what can only acquire real estate? Was selected as replacement housing real estate projects, how to enjoy tax relief? Real estate projects under construction, which projects are eligible to enjoy the ride halfway CDB support? How to prevent government officials in the selection of housing projects in the process of the abuse of power? These types of problem are unresolved.

"Although the details of the operation still encounter many problems, but at least three or four lines to ease pressure on the stock as a short-term strategy for promoting stable and healthy development of the real estate market in these areas is of great significance." Yanghongxu think.

But insiders pointed out that even though the policy is good, but for a huge inventory digestion in third- and fourth-tier cities, the effect may not be large. Assuming a home is 60 square meters, the repurchase of 1 million units will only take care of 60 million square meters of inventory, accounting for 10% of the 600 million square meters in stock. Last year new home sales topped 1.2 billion square meters.

Yanghongxu that the government purchase and the practice of real estate as a long-term solution is not appropriate, otherwise there might return to the era of welfare housing. China's housing supply system, improve housing security system, should be independent of the development of logic and institutional framework.

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