China to reboot markets with home purchases

China is considering a nationwide scheme to reduce inventory in the property markets by urging local governments to purchase unsold homes from distressed property developers.

The State Council is seeking feedback from several provinces and government entities on a proposal that would require local governments to buy millions of unsold homes from the markets, according to Bloomberg.

The plan is similar to a trial scheme proposed in February 2023 by the People’s Bank of China, which set aside 100 billion yuan ($13.85 billion) for special lending to local governments in eight cities that would use the funds to buy unsold properties for use in local subsidized rental programs.

The eight cities are Chongqing, Jinan, Zhengzhou, Changchun, Chengdu, Fuzhou, Qingdao and Tianjin.

On Tuesday, the district government in Lin’An in Hangzhou said it will purchase some private homes with a total gross floor area of 10,000 square meters and turn them into rental housing units.

The nationwide home-purchase plan was proposed after a meeting of the Politburo of the Central Committee of the Chinese Communist Party on April 30 called for reducing property inventory, reforming the country’s property development model and promoting high-quality development of the property markets.

The meeting pointed to what it called an urgent need to review the supply and demand situations in the property markets in order to meet homebuyers’ expectations.

The State Council will hold a video conference with senior officials from the housing ministry, financial regulators, local governments and banks to discuss the property market on Friday morning.

“Without government intervention, it might take a year from now for saleable inventory to be lowered to a