Supervision of Developer Management Practices
Enhancing Housing Quality
Promoting Public Rental Housing Through Purchase of Unsold Homes
The Chinese government has announced measures to stabilize the real estate market, which has been mired in a prolonged slump. According to Yonhap News on December 23, citing remarks by Ni Hong, China's Minister of Housing and Urban-Rural Development, at the National Housing and Urban-Rural Development Work Conference held in Beijing on December 22-23, the government is taking action.
According to the report, the Chinese government will implement city-specific policies, address excess inventory, and improve the supply structure in parallel. Minister Ni stated, "We will enhance the value of existing land through urban regeneration and the redevelopment of underdeveloped areas within cities," and added, "We will actively promote the purchase of unsold homes to utilize them as public rental housing or dormitories."
He also emphasized the construction of so-called "good houses" (好房子). The government aims to more precisely supply public housing, improve housing quality, and stabilize the real estate market. At the same time, it announced plans to strengthen the "white list" system, which expands loans to qualifying real estate companies.
Minister Ni further stated, "Local governments should fully exercise their authority to adjust and optimize real estate policies in a timely manner and support genuine demand to ensure the stable operation of the real estate market." He added, "In cases where pre-sales are implemented, we will standardize the management of pre-sale funds to protect the legitimate rights and interests of homebuyers."
Earlier, in a December 16 op-ed for the Communist Party's official newspaper, People's Daily, he wrote, "We will implement a real estate development company system so that project companies can exercise independent legal rights in accordance with the law, and headquarters fulfill their responsibilities as investors." He continued, "We will strictly prohibit investors from misappropriating project company sales or financing funds in violation of regulations before project delivery, and strictly ban capital flight or early dividend payouts."
Meanwhile, concerns over a potential default by real estate developer Wanke are spreading, fueling a "crisis theory" in the real estate market. There is continued criticism that real estate issues, combined with sluggish domestic demand, are the main culprit behind the economic slowdown. This year as well, the real estate market has remained weak without signs of recovery, and this month, the large real estate company Wanke, whose largest shareholder is state-owned capital, is facing a default crisis.
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