Monday, June 17, 2024

China to announce new measures to fix its property crisis, spur growth

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China Property Country Garden. (Photo: Reuters)

Housing prices in China slumped in the first four months of the year, although factory output rose nearly 7 per cent, according to data released Friday, as the country prepares to announce fresh measures to reinvigorate its ailing property industry.

Officials of the National Bureau of Statistics acknowledged that domestic demand spending by consumers and businesses remained insufficient and said the government was considering further ways to revitalize the property industry after housing prices sank 9.8 per cent in January-April from a year earlier.

Liu Aihua, spokesperson for the bureau, said that in keeping with policies set by the Communist Party leadership, there was a need to find ways to balance supply and demand, meet public expectations for high-quality housing and seize the opportunity to build a new model of high-quality development of the real estate sector.

The State Council, China’s Cabinet, said it would hold a news conference later Friday focusing on the property industry.

China’s housing market has slumped after a crackdown on excessive borrowing by property developers several years ago, dragging along a wide range of other businesses and slowing growth in the world’s No. 2 economy.

Dozens of developers, whose legions of high-rise apartments have transformed urban landscapes across China, have defaulted on their debts.

The government has cut interest rates and freed up billions of dollars of financing to help financially struggling developers deliver housing already promised and paid for.

Some local governments are buying apartments that are going unsold due to weak demand, with plans to rent them out as affordable housing in trial programs that may become national policy.

The financial news outlet Caixin reported that the housing ministry, the central bank, other government agencies and state-owned banks were setting up a joint task force to brainstorm ways to revitalize the industry.

China’s economy grew at a robust 5.3 per cent rate in the first quarter of this year, but that is relatively slow for a developing economy, and signs of weakness have persisted.

The report Friday by the National Bureau of Statistics showed factory output was up 6.7 per cent in April from a year earlier and investment in fixed assets such as factory equipment climbed 4.2 per cent.

But housing starts fell almost 25 per cent year-on-year and sales as measured by floor area were down 20 per cent. Financing for property projects fell 25 per cent.

Retail sales rose only 2.3 per cent in April.

Officials said they expected demand to rebound as the government carries out policies aimed at getting households to sell off old cars and appliances and buy new ones.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: May 17 2024 | 12:23 PM IST

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