A number of provinces have set lower shantytown redevelopment targets for 2019, Bloomberg reports, potentially gutting the housing market of one its largest sources of demand.
Targets to replace old, dilapidated housing with new, affordable lodgings have fallen by as much as 74% compared with last year, according to Bloomberg calculations of government data. Nationwide, the target has shrunk by 14% to just 5 million new units, estimates UBS property analyst John Lam.
In recent years, shantytown redevelopment, part of Beijing’s war on poverty, has been a pillar of new housing demand. Residents often received cash handouts to buy newly-built properties, which contributed to over one-fifth of home sales in 2017, Bloomberg writes.
The paring back of this policy ties in with the government’s fears of an overheated housing market, but the recent slowdown has renewed desire to keep demand in the sector ticking along.
“Local redevelopment targets are clearly linked to home price trends,” said Yan Yuejin, analyst at China Real Estate Information Corp. “All the targets announced so far appear to be a cut from last year, and more such reductions will come.”