Property and construction accounts for more than a quarter of gross domestic product, but the sector has been under unprecedented strain since 2020, when authorities tightened developers' access to credit in a bid to reduce mounting debt.
Since then, major companies including China Evergrande and Country Garden have teetered, while falling prices have dissuaded consumers from investing in property.
Under mounting pressure to boost the ailing market and ensure millions of unused homes go to those in need of housing, Beijing convened a video conference Friday, state news agency Xinhua said.
Friday's meeting was attended by regulators, representatives of top banks, local governments and the property market, Bloomberg News reported.
"Great efforts should be made to promote the handling of commercial housing projects classified as under construction that have been sold and are facing difficulties to deliver," Vice Premier He Lifeng told the meeting, according to state media.
"In cities where there is a large inventory of commercial housing, the government can place orders and purchase some of the commercial housing at reasonable prices as appropriate to use as affordable housing," he added.
No details were provided on how many houses would be bought.
- 'Unexpected and positive' -
"Relevant local governments should... properly handle transferred idle residential properties through retaking, acquisition... to help housing companies with financial difficulties solve their challenges," He said.
State media also reported, citing the central bank and the National Financial Regulatory Administration, that they would cut the minimum down payment rate for first-time homebuyers to 15 percent, one of the country's lowest-ever rates.
The rate will be cut to 25 percent for second-home purchases, it added.
The moves are some of Beijing's most ambitious yet in seeking to reverse a chronic crisis in the housing market.
"This is the lowest down payment requirement and the lowest mortgage interest rate in history," Yan Yuejin, research director of the Yiju Research Institute, told AFP.
"These policies send very bullish signals and will be very helpful in boosting market moods," he added.
"We are very optimistic about the potential effects they will have on boosting the real estate market."
During a State Council briefing Friday afternoon attended by officials from the housing ministry as well as those from China's top regulator and its central bank, officials pointed to "significant difficulties" in the market.
"Significant changes have taken place in the supply and demand dynamics of the property market," said Dong Jianguo, deputy head of China's housing ministry, adding that the sector "is in the process of adjustment".
The briefing also saw central bank deputy governor Tao Ling announce that the government would set up a loan scheme for low-income housing totalling over $41 billion.
Shares in Chinese developers have rallied in Hong Kong in recent days on hopes of fresh support for the sector.
Jeff Zhang, an analyst at Morningstar Inc. in Hong Kong, told Bloomberg Friday's move was "unexpected and positive for property stocks".
- 'Stabilisation plan' -
Agile Group soared 23 percent and Fantasia added 8.3 percent Friday, while Sino-Ocean Group and CIFI Holdings each gained more than 12 percent.
Longfor Group added 10 percent and China Vanke piled on 19 percent each, having jumped 15 percent and 16 percent respectively on Thursday, according to Bloomberg News.
The meeting comes as official figures Friday showed that property prices and sales in the country continued to slip in April.
Further economic data showed that industrial production picked up last month, but consumption continued to slow.
China on Friday also issued around $5.5 billion in ultra-long treasury bonds, Xinhua said, the first batch of a planned sale of nearly $140 billion in such bonds this year.
Measures introduced by the central government to support the sector have so far had little effect.
But HSBC economists wrote in a note that, with Friday's announcement: "China's property stabilisation plan is underway."
"The quicker and bolder the intervention plan, the more effective it will be, in our view," they said.
What's at stake for China's property market
Beijing (AFP) May 17, 2024 -
China unveiled a flurry of measures on Friday to support the country's ailing property market, where the vast debt accumulated over recent years now threatens the stability of the wider economy.
Here's what you need to know:
- What are the issues? -
China's real estate market once served as a vital growth engine, with rapid urbanisation and rising living standards fuelling a construction boom in what is now the world's second-largest economy.
But the sector has fallen on hard times in recent years, with major developers struggling to secure funds to complete projects and falling home prices dissuading consumers from investing.
With an anticipated strong post-pandemic recovery failing to materialise, continuing woes in the property market are raising concerns about potential spillover effects.
Evergrande was among the first major property developers to encounter turbulence. The firm was handed a winding-up order this year by a Hong Kong court after struggling for years to repay creditors following its 2021 default.
Country Garden -- also a leading Chinese developer -- is now in the midst of a legal battle that could see it face a similar fate, as a creditor takes to a court in Hong Kong to demand the firm's liquidation.
Vanke is the latest to face turmoil, with S&P downgrading its credit rating of the firm in April, citing "weakening property sales and margins" and "slowing land acquisitions".
- What are the new measures? -
Beijing has come under increasing pressure to step in and provide support for the vital sector.
Officials took action on Friday, cutting the minimum down payment rate on mortgages for first-time home purchasers from 20 percent to 15 percent.
"This is the lowest down payment requirement... in history," Yan Yuejin, research director of the Yiju Research Institute, told AFP.
"Its impact will be very huge," he said, adding that "we are very optimistic about the potential effects (these policies) will have on boosting the real estate market".
Also on Friday, Vice Premier He Lifeng said at a State Council meeting that "relevant local governments should... properly handle transferred idle residential properties through retaking, acquisition... to help housing companies with financial difficulties solve their challenges".
The statement didn't say how many properties would be bought.
But the announcements are some of the strongest moves yet by Beijing aimed at relieving pressure on the struggling sector.
- Will they work? -
The outlook for policymakers looking to actualise a strong rebound remains uncertain -- Friday's announcements coincided with the release of new data for April that show a mixed bag for China's recent economic performance.
Industrial production last month beat expectations, rebounding to expand 6.7 percent year-on-year, even as consumption and home prices continued to decline.
The gloomy indicators appear to "have finally triggered a sense of urgency that's strong enough to force material action", said Societe Generale analysts Wei Yao and Michelle Lam in a note about Friday's measures.
"The most important positive shift to us is the leadership's willingness to correct course, balancing away a bit from focusing solely on long-term supply-side build-up," they said.
"The chance of housing finding a bottom soon is rising, which is a factor that can improve the economic imbalance, in turn reviving confidence and driving a more sustained rally in China assets."
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