from MicroWave@lemmy.world to world@lemmy.world on 16 Apr 2024 17:03
https://lemmy.world/post/14362928
BEIJING (Reuters) - China’s central city of Zhengzhou has asked residents to sell their second-hand homes to a local state-owned company and buy new ones instead, in a bid to reduce new-home inventories and boost the local property sector.
Local state state-owned company Zhengzhou Urban Development Group Co. will buy 500 second-hand homes from April 20 to June 30, according to a notice released by the Zhengzhou Real Estate Association on Monday.
Residents must buy a new home in the main urban area for a total price that is not less than the total price of the home they are selling, the notice said.
Most of China’s small and medium-sized cities have suffered frail property markets, with the entire property sector in a liquidity crisis since a crackdown on high leverage on developers in 2021.
In Zhengzhou, new home prices fell month-on-month for a 12th straight month in March, according to data from China’s statistics bureau on Tuesday.
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I don’t really understand what this accomplishes.
If you sell a house and then buy a new house, there’s still going to be a house on the market. It’s not reducing housing supply.
This is totally just a guess, but maybe it justifies the labor they paid for to build new homes. The city spent a lot of CCP dollars to build a big city, but the new homes are sitting empty which looks really bad for the statistics/metrics the local government gets measured on by the CCP. So if they show that the new homes are being bought, then they are able to justify all the money they spent.
Or it could be a way to hide a kickback to a developer.
Or maybe it is a way to get people to change the way they think about buying/selling/moving. If people are used to just staying in the same house for their whole lives, then you only need new houses if you have a growing population. If you need to pay laborers to build “something” to keep them employed (make work), then getting people more comfortable with buying a new house and selling their old house (that probably gets flipped or demolished) allows you to justify building new houses, plus a market for paying people to demolish, plus a market for paying people to be realtors. State-owned labor markets can get weird and don’t always make sense.
Maybe.
googles
economist.com/…/chinas-state-is-eating-the-privat…
archive.ph/bPwud
It sounds like the central government is worried about housing prices, and the way they’re dealing with it is apparently to create a new class of housing that one can’t sell.
Maybe these new ones are of that sort and the old ones are going to become that sort. Apparently Zhengzhou is buying up some properties to do that with. This could be part of that.
Hmm.
So, I’m kind of missing context, but maybe this is what they’re up to.
As I understand it, China doesn’t have much of a tradition of stock market investing (for obvious reasons).
And the land ownership situation is wacky. Part of what drove the communist revolution was upset over land ownership. As I understand it, Buddist temples had gotten exemptions from taxation, so they’d hold land as a proxy for other parties. Just a mess. A big part of the communist revolution was the promise of land redistribution. That happened. So, due to land reforms introduced when they went communist, you also couldn’t buy and sell farmland. Instead the state owns it, and you can lease it for 99 years or something like that. Then China underwent rapid urbanization. People moved to cities. People were allowed to own apartments. When you combine rapid urbanization with a country that’s rapidly becoming wealthy, you get exploding real estate prices, because that’s an asset that people can invest in. A lot of people got wealthy by leveraging as far as they could and going long real estate.
Well, that created a huge bubble. You had skyrocketing prices, then plunging prices.
reuters.com/…/chinas-new-home-prices-decline-fast…
So maybe their idea is that the state is gonna limit the amount of housing on the market, force it into the rental market, and then rent it so as to flatten booms and busts.
Thing is, that seems like it’d create an enormous amount of money-losing rentals held by the state or SoEs. Like, if the state uses capital to buy housing stock and take it off the market, they might prop up housing prices for people who are only interested in buying and selling, but then they’re going to have more rentals than the market wants.
Well, that could solve that. The developer is basically getting bailed out by the state. Basically, the state generates artificial dema
I gotta say, this is one of the most well-researched guesses I’ve ever seen. You deserve an award.
This is just a guess but it might be a way to get people to move into new developments which would increase the value of the other unsold homes in said development. Nobody wants to take the risk of moving into an empty neighborhood in case nobody else does. However if you don’t have to worry about the risk of selling your existing home it might make it easier to take that leap of faith.
What they should do is wreck our economy by building a bunch of housing over here.
I suspect the way it’s supposed to work is people will sell old houses with land to the local government and in return get a new apartment in the orphan development.
Local government gets more land to use for corrupt development projects while at the same time rescuing the white elephant created in the previous round of development.