China is trying to end its ‘epic’ property crisis. The hard work is just beginning

Beijing has launched its most ambitious plan yet to rescue its property market, a development that investors have eagerly anticipated for months. But it’s far from certain that the measures will work.

Beijing has launched its most ambitious plan yet to rescue its property market, a development that investors have eagerly anticipated for months. But it’s far from certain that the measures will work. The package is centered around Beijing’s adoption of a policy that has already been tested in a major city — asking local governments to buy unsold homes from developers and convert them into social affordable housing. It also features a reduction in mortgage interest rates and downpayment ratios, and more importantly, 300 billion yuan ($41.5 billion) in cheap central bank cash to fund state purchases of unsold properties. The announcement last week swiftly followed an April meeting of the Politburo, China’s top ruling body, indicating that stabilizing the property sector has become a top priority for Beijing as it tries to revive growth in the world’s second biggest economy. “The policymakers recognize the urgency to prevent an outright property crisis,” said Zhaopeng Xing, senior China strategist at ANZ Research. “The new rescue plan demonstrates the policymakers’ resolution to turn things around.” While the urgency is welcome, experts say the current package may be far too small in scale to be effective and could suffer problems with funding. According to Goldman Sachs, the total value of unsold homes, unfinished projects and unused land in China is about 30 trillion yuan ($4.1 trillion).