Economics Weekly

The government has changed tack to support property developers

China announced another series of measures aimed at stabilising the property market. For the first time in this cycle, the state will purchase developers’ inventories of land and completed-but-unsold projects.

The funding announced so far looks inadequate

At most, we estimate the new schemes could reduce developer inventories by 4%. And operational issues will likely limit the funding to less than that. The more important impact may be psychological. Might this restore buyers’ confidence in pre-sales?

Housing sales are shifting to the secondary market

We’re sceptical. Instead, a different tipping point may be more important. Sales in the secondary market have overtaken new home sales for the first time. If demand shifts further toward existing housing, it will be more difficult to stabilise developer finances.

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