Shares of Chinese property developers rally on report of government plans to buy unsold homes

Shares of Chinese property developers rallied on Thursday after a report that China was considering a plan for local governments across the country to buy millions of unsold homes from distressed companies to ease a protracted property crisis.

Hong Kong’s markets were closed on Wednesday for a public holiday. They have been catching up to gains in mainland property shares since the previous day. Local state-owned enterprises would be asked to help purchase unsold homes from distressed developers at steep discounts using loans provided by state banks, according to the report, which added that many of these homes would be converted into affordable housing.

Authorities also, in recent weeks, ramped up policies intended to clear the stock of unsold housing. Large cities like Beijing and Shenzhen have eased home purchase restrictions, with some allowing homebuyers to “swap” to a new home from an old one. Nomura said if local governments could acquire a meaningful volume of unsold homes from developers, it would help resolve the inventory issue and also channel fund flows to the credit-trapped private companies, said Nomura.

Source: Real Estate Daily Report (realestatedailyreport.net)

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