China may buy millions of unsold homes as part of an ambitious plan to address its current property crisis.
Beijing has reportedly been consulting with officials from local governments on proposals which would allow state-owned companies to buy empty homes in bulk from developers who are under pressure.
Bloomberg stated that the proposals were still in their early stages, but they represent an expanded version of similar programs that have been tested across the country.
Reports said that the homes would be bought at deep discounts and turned into affordable housing.
According to previous plans, the Communist Party ruling in China is willing to spend the equivalent of $280bn per year (£222bn), for five years, to purchase distressed properties and rent them to families at subsidised rates. These properties will be prohibited from being sold in the open market.
Last month, China’s top leaders said they were looking at ways to “digest”, or use up the stockpile of existing homes. This announcement sent Chinese stocks soaring.
The largest economy in the world has been struggling to cope with a real estate crisis. Some of its biggest developers have defaulted on their debt, against a background of weak growth and excessive building.
Evergrande was once the most valuable company in the property sector. It collapsed in 2021, causing a crisis and slowing down the growth. Hong Kong’s court ordered that the company be liquidated in early this year.
The International Monetary Fund has warned that Chinese economic growth will slow further to 4.1pc in next year. This is well below double-digit rates experienced during the decade prior to the financial crisis. The growth rate is expected to drop to a little over 3pc at the end of this decade.
Analysts have also raised the alarm about China’s increasing debt levels. These have increased dramatically in recent years. The Institute of International Finance released a report warning that the global debt had reached a record $315 trillion during the first three month of this year.
The report said that the debt in emerging markets had “increasingly increased to an unprecedented level of more than $105 trillion”. It is $55 trillion higher than it was a decade earlier. China, India, and Mexico have seen the largest increases this year.
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