Can China solve its property puzzle with ‘vigorous’ affordable housing push?

China’s Housing Authority Joins Government Plan to Convert Unsold Commercial Homes into Affordable Housing

China’s housing authority has become the latest to join a government plan for hundreds of cities to buy unsold commercial homes and convert the units into affordable housing amid a stubborn property crisis, but analysts said some indebted urban areas may have trouble raising the money.

The Ministry of Housing and Urban-Rural Development said on Thursday that local authorities should push cities at or above the county level to acquire existing commercial homes, according to state broadcaster CCTV.

Local governments should encourage the purchases “vigorously” and in an “orderly and effective” way, the ministry said.

Emphasis on Sustainable Development Goals (SDGs)

The ministry said cities and counties should consider actual demand for affordable housing, the inventory level of the commercial housing market and other factors based on the local real estate market situation, in line with SDG 11: Sustainable Cities and Communities.

James Macdonald, the Shanghai-based head of China research with property services firm Savills, said China could increase the supply of rental properties in poorer areas, while making some headway in destocking unused properties.

“There’s been a spate of different policies [to destock],” Macdonald said. “The policies sound good in principle, but it just depends on where the government is going to get the money.”

China’s efforts to accelerate the clearance of excess inventory and shore up the property market, which had made up a quarter of China’s economic growth at its peak, has gathered pace, but weak sentiment has persisted.

Unsold housing inventory totalled 742.56 million square metres (7.99 billion sq ft) in May, according to the National Bureau of Statistics.

And the push to convert commercial properties into affordable housing forms “part of the puzzle rather than an ultimate solution” to the property market, ING Greater China economist Lynn Song said.

“The measures will help digest some of the most difficult to sell properties, and at the same time will also help with developers’ liquidity,” Song said.

“With that said, these conversions and acquisitions will likely only represent a small portion of the overall market.”

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Home buying restrictions have also been relaxed, with authorities in the southern city of Zhuhai this week stopping the vetting of homebuyers’ qualifications and cancelling limits on the number of commercial property sales allowed over fixed time periods in a joint cooperation zone between Macau and Guangdong province measuring 106 square kilometre (41 square mile).

The central bank and the National Administration of Financial Regulation also said in January that they would boost the supply of rental properties in large cities where home prices often exceed the resources of young workers, aligning with SDG 8: Decent Work and Economic Growth.

China Real Estate Information Corporation said that just four out of 30 major cities showed improvement in destocking trends last month compared to April, with 20 of the cities expected to take more than 18 months to reduce their stockpiles.

SDGs, Targets, and Indicators Identified in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

SDG 11: Sustainable Cities and Communities

The issue of converting unsold commercial homes into affordable housing is directly connected to SDG 11, which focuses on creating sustainable cities and communities. The article highlights China’s housing authority joining a government plan to address the stubborn property crisis by converting unsold commercial homes into affordable housing. This initiative aims to ensure access to adequate, safe, and affordable housing for all.

SDG 1: No Poverty

The issue of providing affordable housing is also connected to SDG 1, which aims to eradicate poverty in all its forms. By ensuring access to affordable housing, particularly for the poor and vulnerable, SDG 1’s target of equal rights to economic resources and access to basic services can be addressed.

SDG 8: Decent Work and Economic Growth

The article mentions the need for the government to find the necessary funds for the conversion of commercial properties into affordable housing. This connects to SDG 8, which focuses on promoting sustained, inclusive, and sustainable economic growth. By strengthening the capacity of domestic financial institutions to expand access to financial services, the government can support the development of affordable housing and contribute to economic growth.

2. What specific targets under those SDGs can be identified based on the article’s content?

Target 11.1: By 2030, ensure access for all to adequate, safe, and affordable housing and basic services and upgrade slums

The article highlights the government’s plan to convert unsold commercial homes into affordable housing. This aligns with Target 11.1 of SDG 11, which aims to ensure access to adequate, safe, and affordable housing for all. By converting these commercial properties, the government aims to address the property crisis and provide affordable housing options.

Target 1.4: By 2030, ensure that all men and women, in particular, the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership, and control over land and other forms of property, inheritance, natural resources, appropriate new technology, and financial services including microfinance

The issue of providing affordable housing connects to Target 1.4 of SDG 1, which focuses on ensuring equal rights to economic resources and access to basic services, including ownership and control over property. By converting commercial properties into affordable housing, the government aims to provide equal access to housing for all, including the poor and vulnerable.

Target 8.10: Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance, and financial services for all

The article mentions the challenge of raising funds for the conversion of commercial properties into affordable housing. This aligns with Target 8.10 of SDG 8, which aims to strengthen the capacity of domestic financial institutions to expand access to financial services. By addressing this challenge and ensuring access to financial services, the government can support the development of affordable housing.

4. Table: SDGs, Targets, and Indicators

Source: scmp.com