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Chinese Cities and Provinces Work to Reduce Unsold Homes

The floor space of residential property for sale reached a record high of 718.53 million square metres at the end of 2015, according to China's National Bureau of Statistics. Local governments are taking efforts in clearing up the massive inventory.

Henan proposed to promote the healthy development of the real estate sector by means of reducing unsold homes and stimulating consumption.

In the government work report, Hebei's governor Zhang Qingwei stressed the need to bring down the housing inventory, advance housing system reform targeting at the needs of the "new citizens" and stabilise the real estate market.

Fujian also gave emphasis on reducing unsold homes, stabilising housing consumption, developing the rental market, raising the proportion of monetised resettlement in run-down areas renovation, stepping up reconstruction of urban shantytowns and run-down areas.

Jilin will encourage and give support to real estate developers to lower housing prices by helping them to solve the problem of financing while regulating land supply according to the progress of reducing housing inventory.

Faced with the high volume of housing inventory, a stand-alone or short-term policy is difficult to achieve immediate effects. Long-term efforts in reducing unsold homes are necessary to match supply with demand.

Many local policy plans have in fact focused on effectively initiating demand. It is not uncommon in the government work reports presented at the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC) to advocate measures of continuing to relax credit policies, reducing housing purchase costs while increasing housing subsidies, accelerating the shantytowns renovation and monetary subsidies as major means to reduce unsold homes.

Henan stated clearly to include the permanent resident population with stable work into the coverage of provident fund, promoting home purchase by the "new citizens" and farmers entering the cities.

Inner Mongolia proposed to study the policy of supporting home purchase of farmers and herdsmen by housing fund, encourage housing loans from financial institutions for farmers and herdsmen making home purchase in the cities.

Hunan put forward that monetised resettlement is an effective means to reduce unsold homes. In principle, the proportion of monetised resettlement of run-down areas renovation is required to be not less than 50% in 2016 and projects of high resettlement proportion will be given more funds.

In the long term, vigorous development of the local economy is needed in order to reduce unsold homes with positive effects brought along on the property market under China's new-style urbanisation. Housing consumption is expected to be driven by the household registration system reform.

The reform of the household registration system is an important tool to reduce unsold homes around the country. Shanghai proposed to shift city construction from the urban areas to the suburbs, further improving the level of suburban development.

Hebei set the goal to have the urbanisation rate of household population and permanent resident population residing in cities and towns to be about 48% and 67%, respectively, in 2020.

Local delegates of the NPC and CPPCC have suggested the granting of concessional housing loans for new citizens by the state with interest rates equal to or more favorable than the loan rates of housing funds in a bid to help home purchase and settling down in towns by migrant farmers, easing the bottleneck for relocation of rural population in the cities.

In addition to newly added housing needs of migrant workers and farmers, another direction to solve the high housing inventory is the rental market. Government work reports of Fujian, Hunan and Jinan in Shandong made clear to vigorously develop the housing rental market.

Not only working on the demand side, some areas also gave emphasis to the supply side. Hunan and Jinan in Shandong proposed in the government work report to control the number of new housing units, improving housing supply structure.

Content provided by Picture: HKTDC Research
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