China announces super package to overcome crisis in the real estate sector

China announced this Friday (May 17, 2024) measures to revive the country’s real estate sector, which is facing a sharp decline. Beijing will encourage local governments to buy properties and turn them into public housing. It will also relax mortgage rules and offer incentives for completing unfinished projects.

The country reduced the minimum down payment amounts for mortgage loans for the purchase of housing by individuals and eliminated the minimum interest rates for mortgage loans when purchasing 1st and 2nd properties.

The interest rate for loans of up to 5 years for purchasing housing will be reduced by 0.25%, reaching 2.35%. The rate for loans over 5 years also falls by 0.25%, remaining at 2.85%.

The People’s Bank of China, China’s central bank, said the country will reduce housing provident fund loan rates for individuals. The long-term housing savings plan consists of monthly deposits required by employers and employees.

The country’s deputy prime minister, He Lifeng, called this Friday (May 17) for an increase in the construction of government-subsidized housing. According to him, the real estate market is linked both to people’s immediate interests and to the country’s economic development.

“Efforts must be made to address risks relating to unfinished commercial housing projects, ensure delivery of housing projects and drive reduction in available commercial housing”, he said, quoted by the state agency Xinhua.

According to him, the governments of regions where there are housing parks “relatively large“can buy some houses”at reasonable prices” and provide them as affordable housing, he added.

In an interview with journalists this Friday (May 17), Tao Ling, vice-governor of the People’s Bank of China, said that the authority will have a fund of 300 billion yuan (around R$213.2 billion) to support shopping. He stated that the measures announced by the government could yield up to 500 billion yuan (R$355.3 billion) in bank loans.

“In order to promote the construction of a new model of real estate development, an additional 500 billion yuan in supplementary mortgage loan quotas will be added”, said Tao Ling.