China's drastic bid to solve a major housing crisis

Here is one way to confront a housing crisis.

The Chinese government is reportedly preparing to buy millions of empty, unwanted apartments in abandoned building projects and turn them into affordable housing.

China’s housing market has been in a deep economic ravine for several years, caused by debt among local developers.

Some of the properties that Beijing is targeting under the ambitious plan, according to reports from Bloomberg, are in complexes that developers were unable to finish.

The State Council is seeking feedback from local governments and provinces on the concept to swoop on languishing buildings owned by developers in distress.

The plan would involve local governments buying the millions of the unsold homes and converting them into social housing.

This would in turn ease the glut on the sluggish private market, which has become a blight on the economy, driven by crippling debts among developers who cannot sell their stock.

Overbuilding put the Chinese property market under stress, bursting a bubble, and the collapse of major Chinese developer Evergrande Group in 2021 added to the problems.

Evergrande – once the world’s most profitable real estate company – was liquidated by a Hong Kong court, owing $US300 million ($AU449 million) to its investors. At its high point, Evergrande was preselling apartments en masse to middle and upper-income Chinese.

The failed business is an emblem of the wider property market in China – in debt and failing to flourish.

Bloomberg broke the story that the Chinese government was seeking consultation on the idea, including from banks.

News reporter James Mayger of Bloomberg News said in a news bulletin interview that if the plan comes off, it will shift the way Chinese families live.

“If this was to happen, this is a huge change to how people live in China, it’s a huge change for the government is working with the housing sector…” he said. “If this does happen, and it is rolled out across the country, and the governments of the provinces buy millions of homes, I think this is a real sea change not only in the housing crisis that we have seen, but also going forward how the economy works across the country.”

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