HomeTop StoriesChinese regulators will discuss real estate support with banks on Friday

Chinese regulators will discuss real estate support with banks on Friday

(Bloomberg) — China’s government plans to hold a meeting with key officials Friday morning to discuss the real estate market, including a proposal to clear excess housing stock, people with knowledge of the matter said.

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

The large number of invitees from across government and the financial sector adds to signals that China’s leaders are prioritizing efforts to end the real estate market slump weighing on the world’s second-largest economy. world. Shares of Chinese developers rose Thursday after Bloomberg reported that China is considering a proposal to let local governments buy millions of unsold homes.

The State Council – China’s cabinet – is trying to gather feedback from relevant parties by the end of this month and finalize a draft plan in June, the people added. The Housing Ministry did not respond to a request for comment.

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Senior officials from the PBOC, the National Financial Regulatory Administration, the Ministry of Housing and Urban Rural Development and the Ministry of Natural Resources will attend a briefing on Friday afternoon on the measures to ensure home delivery, according to a statement from the central bank.

Authorities are likely to announce new policy measures to tackle the country’s ongoing real estate crisis at a meeting scheduled for Friday morning, Caixin reported, citing unidentified sources. Officials will discuss ways to expand the so-called white list of supported developments to previously disqualified housing projects, Caixin said.

Bloomberg reported on Wednesday that local state-owned companies would be asked to help buy supplies from distressed developers at steep discounts using loans from state-owned banks. A large portion of the buildings would then be converted into affordable housing.

A Bloomberg gauge of Chinese real estate stocks rose as much as 14% on Thursday, with Sino-Ocean Group Holding Ltd. and China Vanke Co. were among the biggest winners. The index has risen more than 50% since mid-April on optimism that policymakers will take more steps to revive the market.

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Among other recent measures, several major cities have lifted restrictions on home purchases to revive demand. Homebuyers remain concerned about prices, job security and the ability of cash-strapped developers to deliver apartments.

If authorities go ahead with the stockpile reduction plan, it would mark a new phase in the government’s campaign to tackle the biggest drag on economic growth. Home sales in China fell by about 47% in the first four months and unsold housing inventory is hovering at an eight-year high, exacerbating a crisis that threatens to put about 5 million people at risk of unemployment or lower incomes.

China may have to spend at least 1 trillion yuan ($139 billion) to buy up unsold homes, Bloomberg Intelligence credit analysts Andrew Chan and Daniel Fan estimate. “While several factors may influence the implementation of this measure, any new policy is likely to be positive,” they wrote in a note.

Enlisting local governments to reduce housing surpluses could further worsen their debt levels, which rose to 56% of gross domestic product last year. Banks would also come under pressure as their balance sheets have already been eroded by the rise in bad loans and shrinking margins.

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(Updates with statement on Friday briefing and Caixin report on possible announcement, in fifth and sixth paragraphs.)

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