BEIJING (Reuters) – The Chinese city of Zhengzhou has asked residents to sell their second-hand homes to a local state-owned company and buy new ones instead, in a bid to reduce the supply of new homes and boost the local real estate sector.
The local state-owned Zhengzhou Urban Development Group Co. will purchase 500 second-hand homes from April 20 to June 30, according to a notice released by the Zhengzhou Real Estate Association on Monday.
Residents must purchase a new home in the main urban area for a total price no lower than the total price of the home they are selling, the notice said.
Most small and medium-sized cities in China have suffered from weak real estate markets, with the entire real estate sector in a liquidity crisis since the crackdown on high developer debt in 2021.
In Zhengzhou, new home prices fell for the twelfth month in a row in March, data from China’s statistics agency showed on Tuesday.
Local cities that have been given full autonomy to adjust real estate market policies have relaxed restrictions on home purchases, lowered mortgage rates, lowered down payments and offered subsidies for home purchases.
These policies have had limited impact in the short term, in part because potential buyers have been reluctant to purchase new homes due to concerns about the ability of indebted developers to deliver projects on time.
“As the bottom has yet to be confirmed, we expect real estate to remain a major drag on growth this year. Policies to stabilize the market are still likely to be needed in the coming months,” said Lynn Song, chief economist for Greater China ING. said in a research note on Tuesday.
(Reporting by Liangping Gao and Ryan Woo; Editing by Gerry Doyle)
