China’s regional governments have begun to support their troubled property markets. If it does not do this it is unlikely the nation is wwill sustain growth at more than 8% a year.
Real estate comprises about 25% of the China’s fixed asset investment, which is in turn a major driver of growth.
It remains unclear whether the provinces have been given the green light explicitly by Beijing to stimulate their real estate, or whether they are merely following their own natural instincts to boost their economies.
Land sales typically account for about 30% of local government revenues — and senior officials’ bonuses depend on economic growth indicators.
The central Government’s primary concern a year ago was to prevent over-heating, and to see the share and property market bubbles deflate steadily, in part through limiting credit to developers and home buyers.
Now Beijing wants primarily to see growth maintained in the sector.
Some measures already in place:
Xi’an, home buyers subsideized depending on the size and price of the flat.
Shenzhen city, special rates for first-time home buyers.
Nanjing city accepting flexible payment terms from developers.
Xiamen offering home buyers automatic residency status in the city
Changsha city subsidising first-time buyers of modest flats by $16,000 and cutting transaction taxes from 1.89-1.1%.
China’s leading business magazine, Caijing, said: ‘Under the tight credit controls of the past half year, developers are desperately searching for a means to boost capital through a broad range of methods, including going public, refinancing, bond issuance, selling projects, or by quitting existing deals.’
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Source: The Australian