China Considers Buying Millions of Unsold Homes Amid Real Estate Crisis

By John Lopez

May 15, 2024 05:08 PM EDT

China is considering a major intervention in its property market amid ongoing turmoil. According to reports, the Chinese government is considering purchasing millions of surplus homes to help stabilize the sector.

This move comes as the country is dealing with a severe property crisis, marked by declining home sales and a surplus inventory of unsold housing units.

China Considers Buying Millions of Unsold Homes Amid Property Market Crisis

As Bloomberg reported, the State Council is currently gathering feedback from several provinces and government entities on the preliminary plan. If implemented, this initiative would be one of the Chinese government's largest efforts to address the challenges confronting its property market.

Under the proposed plan, local state-owned enterprises would purchase unsold homes from distressed developers at significant discounts. State banks would provide loans to facilitate these purchases. The acquired properties would be repurposed as affordable housing units, potentially alleviating some of the housing market's pressures.

Despite ongoing discussions, the plan's feasibility and timeline remain open to debate. Pending approval from the Chinese administration, finalizing the proposal is expected to take several months.

CHINA-ECONOMY-PROPERTY-EVERGRANDE — This aerial view shows a housing complex by Chinese property developer Evergrande in Nanjing, in China's eastern Jiangsu province on January 29, 2024. A Hong Kong court on January 29 ordered the liquidation of China's property giant Evergrande, but the firm said it would continue to operate in a case that has become a symbol of the nation's deepening economic woes.
(Photo : Photo by STR/AFP via Getty Images)

China Real Estate Crisis

China's property market has been in turmoil, with home sales falling by approximately 47% in the first four months of the year. The surplus inventory of unsold homes is at an eight-year high, raising concerns about the crisis's economic impact.

Analysts estimate that if the situation persists, roughly five million people could be facing unemployment or reduced incomes.

Previous initiatives have included significant financial commitments, with proposals for annual investments of up to $280 billion over five years to help distressed properties.