China Should Set Up Real Estate Funds to Boost Supply of Affordable Housing, Academic Says
Wu Simin
DATE:  Jun 27 2024
/ SOURCE:  Yicai
China Should Set Up Real Estate Funds to Boost Supply of Affordable Housing, Academic Says China Should Set Up Real Estate Funds to Boost Supply of Affordable Housing, Academic Says

(Yicai) June 27 -- China should establish a special real estate funds to buy properties and convert them into affordable rental homes, in order to support the government’s recent initiatives to stabilize the property market, said the deputy dean of Peking University’s Guanghua School of Management.

These funds, which will be under the supervision of government agencies and operated by specialist firms, can improve investment efficiency, put the properties to better use and avoid any complications that could arise should the government directly inject funds to help developers, Zhang Zheng told Yicai in an interview at the World Economic Forum's Annual Meeting of the New Champions.

China has recently been urging local governments to buy unsold housing to rent at cheap prices to boost the sluggish real estate market. On May 17, the central bank established a CNY300 billion (USD41.3 billion) refinancing facility for affordable housing to support local governments in carrying out these measures.

The move will not only help meet the housing needs of migrant workers, it will also assist developers through their liquidity crisis and prevent real estate risks from turning into financial system risks, Zhang said.

But whether local governments have the financial resources to purchase such properties and whether they are able to effectively use these assets, remains to be seen, he added.

There is an oversupply of properties on the market, with more than 700 million square meters of housing for sale and a considerable number of projects under construction not to mention reserved land plots, Zhang said. It is therefore difficult to reverse the downward cycle by only relying on easing curbs in the property sector. Further efforts in terms of macro policies, especially fiscal policies, are also needed.

Eighteen percent of China’s population lives in cities where they do not have permanent residence status, or hukou, and there will continue to be high population inflows from rural areas to the big cities. By 2035, there may be nearly 400 million new city residents with a housing problem, so it is important to enlarge the supply of affordable homes, Zhang said.

Editor: Kim Taylor

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