Shenzhen has become China’s first tier-one city to announce plans to buy unsold homes from struggling developers to turn them into rentals for low-income people.
It comes three months after China’s central bank set up a CNY300 billion ($42bn) fund in May to help local state-owned enterprises buy unsold new private homes to convert them to social housing.
As well as meeting demand for lower-cost housing, the goal is to start reducing the country’s enormous over-supply of new homes, which has contributed to widespread price deflation.
Across 70 Chinese cities, new home prices in June were down 4.5% year-on-year from the same month in 2023, after a 3.9% y-o-y fall in May.
Some cities have seen bigger drops, including Guangzhou, down 9.3% y-o-y in June, and Shenzhen, a tech hub, down 7.3% y-o-y in June.
In the first half of this year, the total area of new home sales fell 22% on the same period last year, Nikkei Asia reports, citing China’s National Bureau of Statistics.
8.3 million unsold homes?
As of April this year, the combined area of unsold new homes in China stood at 745.5 million square metres, reports The Financial Times, also citing China’s National Bureau of Statistics.
Assuming an average unit size of 90 sq m, that could equate to 8.3 million unsold homes.
In Shenzhen, state-backed Shenzhen Public Housing Group will buy unsold homes, prioritising entire tower blocks, reports business news site Yicai Global.
It will also look for houses under 65 sq m close to transportation hubs and other facilities.
Shenzhen Public Housing Group builds and manages affordable housing developments.
At the end of last year, it planned to build 282,000 affordable homes, according to Yicai Global.
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