China moves to spark housing market with offer to buy empty homes

First-time buyers will now have to put down a minimum 15% deposit from a previous 20%, the People’s Bank of China (PboC) said. Minimum interest rates on mortgages were also scrapped.

The property sector has been creaking due to massive oversupply of apartments that now lie empty after developers went on a borrowing spree.

China's ruling Communist Party said it would allow local government authorities to buy some homes at "reasonable" prices to provide affordable housing, Vice-Premier He Lifeng told an online meeting on housing policy on Friday, state news agency Xinhua reported.

Property and construction accounts for more than 25% 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 under the weight of loans. So-called "ghost cities" of empty apartment blocks have sprung up, sending prices plummeting.

The housing policy 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," He said.

In a separate data dump, industrial production in the world’s second-largest economy rose more than expected in April to 6.7% year on year, according to official data from the National Bureau of Statistics. The rise beat forecast of 5.5% and March’s 4.5% increase.

However, it was a different picture on the retail sales front, where 2.3% growth from April last year was well below the forecast 3.7%.

Fixed asset investment rose 4.2% for the first four months of the year, lower than the 4.6% expected increase.