(Yicai) June 21 -- The Chinese local governments' initiative to stabilize the real estate market by acquiring unsold houses will likely be expanded from only some major cities to also county-level cities.

Local governments of county-level cities and above should comprehensively consider the actual demand for affordable housing and the home inventory level in their jurisdictions and purchase properties to rent at cheap prices in accordance with the principles of independent decision-making and voluntary participation, the Ministry of Housing and Urban-Rural Development said yesterday at a working conference.

County-level cities are the third-level administrative regions in China, generally governed by prefecture-level cities. China has 397 county-level cities, 293 prefecture-level cities, and four direct-controlled municipalities: Beijing, Shanghai, Tianjin, and Chongqing.

The MOHURD announced on May 17 that municipal governments were allowed to organize local state-owned enterprises to purchase some unsold houses at reasonable prices for affordable housing to boost the sluggish real estate market. On the same day, China's central bank established a CNY300 billion (USD41.3 billion) refinancing facility for affordable housing to support local governments in implementing the above project.

Since 2022, several Chinese cities have piloted initiatives where the government purchases properties for storage, primarily in larger second-tier cities, such as Jinan, Suzhou, Qingdao, Tianjin, and Hangzhou. After the MOHURD's statement was released last month, several other cities, including Guangzhou and Wuhan, also introduced similar policies.

The government's acquisition of a portion of unsold apartments at reasonable prices for affordable housing is expected to help improve the sales and financial status of real estate developers, said Yan Yuejin, research director at E-House China Research and Development Institute

This measure, coupled with previously implemented policies, such as lowering down payment ratios and removing the lower limit on mortgage interest rates, is expected to improve the real estate market conditions this year, Yan added.

Editors: Dou Shicong, Futura Costaglione