Officials in China have rolled out new measures in an effort to guard the property sector against a potential fallout after property developer Evergrande was ordered to liquidate its assets in late January.
In a state media report, Beijing announced its latest property relief measure that includes a new loan worth 300 million yuan ($46 million) to a state-backed development. The loan is part of the Chinese government's "project whitelist" mechanism, which aims to support a list of real estate companies eligible for credit, debt, and equity financing, as translated via Google Translate.
The initiative has been extended to 107 real estate developments in Nanning and 314 projects in Chongqing, including 22 financing institutions, per the China Securities Journal.
Apart from new loans, Beijing announced it is lifting home-buying curbs for houses in Suzhou and Shanghai. Previously, Suzhou residents were only allowed to buy up to three apartments measuring less than 120 square meters. Single non-Shanghai homeowners were not allowed to purchase homes in certain areas, according to Reuters.
What Led to the Measures
The recent measures are part of Beijing's effort in boosting the economy, especially in the real estate sector. The measures come after more than 50 property developers defaulted on their debt amid overbuilding in the country. An estimated 233 home developers also filed for bankruptcy last year.
Evergrande, which was once the country's largest seller of real estate, defaulted on its $19.2 billion offshore debt in December 2021. A Hong Kong court later ordered the liquidation of the company as its debts ballooned to $300 billion.
"The hearing has lasted for one and a half years, and the company still has not been able to bring forward a concrete restructuring proposal," Hong Kong Justice Linda Chan said. "I think it is time for the court to say enough is enough."
China's real estate crisis may continue to crumble under massive debts, with Natixis chief economist Alicia Garcia-Herrero predicting that the country's real estate market has yet to touch the bottom.
"The market has not touched bottom yet. There is still a long way to go," she said.
China's real estate market began stalling in 2020 following the COVID-19 pandemic after Beijing curbed excessive borrowing of real estate developers in fear of a housing bubble.
READ NEXT: Canada Extends Ban on Foreign Ownership of Housing Until 2027