Chinese ministry to tackle real estate market risks from delivery delays

Cranes are seen at a construction site of a building complex in Beijing. Photo: CGV

China’s top housing regulator on Thursday pledged to address risks related to late delivery of properties by some developers in a bid to maintain stability in the real estate market and continue to adhere to the principle that “the Housing is for living, not for speculating”. “

The main goal is to “ensure delivery of properties, livelihoods and stability of people” by respecting the rule of law and market forces, and increased scrutiny from property developers and local governments, Ni Hong , Deputy Minister of Housing and Urban-Rural Development, said Thursday at a press conference.

In 2022, the ministry will continue to uphold the principle that “housing is for living, not speculation” and maintain consistent and stable housing policies, while trying to meet people’s basic demand for housing, the official said.

China’s real estate market maintained steady development last year, marked by record sales of commercial residential buildings, falling house prices and growing investment in real estate development.

The sale of residential buildings reached 1.565 billion square meters in 2021, up 1.1% year on year, and the highest level in years, according to ministry data.

The rise in house prices moderated last year. Among 70 large and mid-sized cities, new and used home prices rose 2% and 1%, respectively, representing declines of 1.7 and 1.1 percentage points from 2020.

Investment in real estate development hit 14.8 trillion yuan ($2.34 trillion) last year, up 4.4 percent year on year. Investment in residential buildings rose 6.4%, 1.5 percentage points faster than overall fixed asset investment.

China’s housing demand has huge growth potential as the country is still in a process of rapid urbanization, with the total population and number of families in cities and towns still increasing, said Wang Menghui, head of the ministry. of Housing and Urban-Rural Development, says the same briefing.

“We have more than 11 million newly employed people in cities and towns every year, and their inelastic demand for housing is strong,” Wang said.

China will increase its supply of affordable rental housing this year, aiming to supply 2.4 million units, a jump from last year, Wang said.

In 2021, China offered 942,000 affordable rental units in 40 cities with large floating populations, a measure that was intended to help address the housing difficulties of 3 million newcomers to these cities.

China will support the real estate market to better meet the reasonable demand of home buyers and adopt city-specific policies to boost the virtuous cycle and healthy development of the sector, the annual Central Economic Work Conference said in December.

Thursday’s briefing came as some developers prepare to tackle debt and delivery issues.

Indebted Chinese developer Evergrande aimed to fully resume construction work across China with the aim of delivering 600,000 apartments in 2022, company chairman Hui Ka Yan said in an internal meeting in early February.

The Guangzhou-based developer, facing more than $300 billion in debt, has been selling off assets since last year to pay banks, suppliers, onshore bondholders and international investors.