With millions of finished homes left unsold in the Chinese real estate market, the government has now instituted interventions to assist the ailing industry. In a report from reuters.com, local governments have started to purchase thousands of homes at discounted rates and then selling them to China's poorest.
While this may not be a long term solution to the problems plaguing the Chinese real estate industry, the need to move nearly 657 square kilometers of residential floor space has become paramount to help in easing the burden on the economy.
This policy though provides a win-win solution for many stakeholders in China. The poorest Chinese have access to homes at subsidized prices, thus improving the overall poverty situation in the country. Developers are essentially given a lifeline, as they are able to recoup at least a partial amount for their cost inputs. Furthermore, the moribund economy is jumpstarted with the housing industry revitalized to a certain extent.
While this is one way to lessen the glut of homes, elsewhere the real estate market is getting a much needed shot in the arm. In a report from blogs.wsj.com, many stock market investors are pulling out their money from the bourse and instead are diverting it into properties.
This is clearly seen in the Shanghai Composite Index, where in the past three weeks the volume has fallen by nearly 30 percent. The tide though will continue to fall, as the results of the recently conducted China Household Finance Survey had indicated that more than one third of respondents are planning to decrease their stock investments compared to 12.3 percent who intend to increase their holdings.
Another survey, this time from the Southwestern University of Finance and Economics located in Chengdu conducted a telephone poll of 140 respondents where they found out nearly five percent had purchased homes in the second quarter of the year. About 70 percent of the households surveyed had earned money on the stock market.