China Tries to Hit Two Birds With One Stone In Property Rescue Bid

In a bid to alleviate a protracted property crisis, Chinese cities have been ordered by Beijing to buy newly-completed apartments and turn them into affordable housing.

Public statements from 20 Chinese cities indicate that local officials are thinking beyond the usual low-income demographic targets for subsidized housing.

These cities have unveiled plans to broaden eligibility for subsidies and address other economic issues in the process, Liangping Gao and Marius Zaharia reported for Reuters.

The directive aims to tackle the property crisis that has led to bloated inventories of unsold apartments, crippling developers' cash flows and weighing heavily on home prices, consumer confidence, and economic activity.

The property downturn and sluggish consumer demand pulled growth below forecasts in the second quarter.

Analysts see the new approach on social housing as a rare consumer-oriented move in China that promises to transfer resources from local governments to households, potentially boosting domestic demand.

Public statements from 20 Chinese cities indicate that local officials are thinking beyond the usual low-income demographic targets for subsidized housing.

They have distributed questionnaires to a broad range of groups, including doctors, teachers, migrant factory workers, and scientific researchers.

Economists believe these announcements show that cities are using the new housing policy to address issues such as brain drain and net population outflows to mega-cities like Shanghai or Shenzhen.

Easing labor shortages in factories and strengthening healthcare and education could help reduce some of the economic and social pressures in smaller population centers by boosting activity and broadening the tax base.