China is hoping to end a multi-year real estate recession by taking a cue from Singapore’s social housing model. Singapore’s housing market is dominated by public housing.
In recent weeks, the Chinese government has put two “big projects” at the center of its housing policy: social housing construction and urban redevelopment. These projects have received the highest level of political support and could soon receive more than 1 trillion yuan (approximately 20.78 trillion yen) in support from the central government.
Bloomberg is Earlier, it was reported that China is considering offering low-interest loans from the People’s Bank of China (Central Bank) to major policy banks to finance such projects. The amount being discussed is equivalent to approximately 10% of annual new home sales. It could also increase through further leverage or other financing.
Most Of Singapore New Home Construction Is Social Housing
Change in housing stock per decade, by category
Source: Government data cited in Sock-Yang Phang, “Policy Innovations For Affordable Housing in Singapore”
If China’s new plan goes well, it will end a nearly three-year slump in real estate construction and help President Xi Jinping move toward reducing inequality. It can also contribute to the “common wealth” movement.
“This plan is very much a long-term structural adjustment of the real estate sector towards the Singapore model,” said Hong Kong-based senior economist at Australia and New Zealand Bank. “I don’t think it’s a short-term initiative to promote real estate investment, but more towards the 2035 goals of Co-Wealth,” she said.
Details of the construction of social housing have not yet been fully disclosed. The State Council issued the instructions last month in a confidential document called “Catification No. 14”, the Economic Observatory reported. According to the report, 35 cities will be piloting the program.
“This proposal, seen as an attempt to reform China’s real estate, could change the balance between public and private housing,” said Christy Fung and Lisa Chou, real estate analysts at Bloomberg Intelligence. He expressed his view.
Details of government funding for the project are yet to be confirmed. Bloomberg reported that the plan to utilize PBOC funds has the support of Vice Premier He Lifeng. Vice Premier He has recently been appointed as the top official in charge of economic and financial policy.
China Uses Social Housing To Support Property Market
China’s current downturn has lasted longer than any on record
Source: China National Bureau Of Statistics; Bloomberg
Original title: China Puts Money Behind Singapore Model in Major Housing Shift (Excerpt)
Tags: China pivots public housing construction Singapore model overcoming real estate recession Bloomberg
