Top China officials meeting on May 17 to discuss support for property market

BEIJING - China’s government plans to hold a meeting with key officials on the morning of May 17 to discuss the property market, including a proposal to clear excess housing inventory, according to people with knowledge of the matter.

Senior officials from the Housing Ministry, financial regulators, local governments and state banks will attend the State Council meeting by video conference, the people said, asking not to be identified because the matter is private.

The breadth of invitees from across the government and the financial sector adds to signs that Chinese leaders are prioritising efforts to end a property market slump that’s weighing on the world’s second-largest economy. Shares of Chinese developers jumped on May 16 after Bloomberg reported that China is considering a proposal to have local governments buy millions of unsold homes.

The State Council – China’s Cabinet – is seeking to collect feedback from relevant parties by the end of May and finalise a draft plan in June, the people added. The Housing Ministry did not respond to a request for comment.

Spiralling declines in property prices are adding to the urgency. Official data on May 17 showed that home prices in April recorded the

steepest month-on-month drops in a decade

.

Senior officials from the People’s Bank of China, National Financial Regulatory Administration, Ministry of Housing and Urban-Rural Development and Ministry of Natural Resources will attend a briefing on the afternoon of May 17 regarding the measures to ensure home delivery, according to a statement from the central bank.

The authorities will likely announce new policy measures to tackle the country’s persistent real estate crisis at a meeting scheduled for the morning of May 17, Caixin reported, citing unidentified sources. Officials will discuss ways to expand the so-called white list of supported developments to include previously disqualified housing projects, according to Caixin.

Bloomberg reported on May 15 that local state-owned enterprises would be asked to help purchase inventory from distressed developers at steep discounts using loans provided by state banks. Many of the properties would then be converted into affordable housing.

A Bloomberg gauge of Chinese real estate stocks rose as much as 7 per cent on May 17, following an 11 per cent gain the day before. The index has jumped more than 60 per cent since mid-April on optimism that policymakers will take more steps to revive the market. 

Among other recent measures, several large cities have removed restrictions on home purchases to rekindle demand. Home buyers remain concerned about prices, job security and the ability of cash-strapped developers to deliver apartments.

If the authorities proceed with the plan to reduce inventories, it would mark a new phase in the government’s campaign to address the biggest drag on economic growth. China’s home sales plummeted about 47 per cent in the first fourth months and unsold housing inventory is hovering at an eight-year high, exacerbating a meltdown that threatens to put about five million people at risk of unemployment or reduced incomes.

China might need to spend at least one trillion yuan (S$190 billion) to buy up unsold homes, Bloomberg Intelligence credit analysts Andrew Chan and Daniel Fan estimated. “Although several factors may affect the execution of this measure, any new policy is likely to be positive,” they wrote in a note.

Enlisting local governments to reduce the housing glut could further exacerbate their debt level, which has soared to 56 per cent of gross domestic product as at 2023. Banks would also be under pressure, as their balance sheets have already been eroded by rising bad loans and narrowing margins. BLOOMBERG