A thread on how the Chinese government will deal with the properties crisis.🧵
There are 3 main ways:
🔸Bifurcation of the properties sector.
🔸Renovation of old neighborhoods.
🔸PBOC loans for local governments used in affordable rental housing schemes.
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There are 3 main ways:
🔸Bifurcation of the properties sector.
🔸Renovation of old neighborhoods.
🔸PBOC loans for local governments used in affordable rental housing schemes.
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What does bifurcation of properties mean?
As the screenshot of the news article above suggests, Guangzhou and other supercities in China have already or is considering easing all restrictions on investment properties.
Chief among which, is the purchase limit.
As the screenshot of the news article above suggests, Guangzhou and other supercities in China have already or is considering easing all restrictions on investment properties.
Chief among which, is the purchase limit.
This creates a 2 tiered market, one that exist in supercities, of which China has around 30.
And the rest of the country.
HOWEVER, investment properties have a soft limit on luxury properties.
So it'll have small effect on commercial properties aimed at the working class
And the rest of the country.
HOWEVER, investment properties have a soft limit on luxury properties.
So it'll have small effect on commercial properties aimed at the working class
This bifurcation will stabilize housing price, and unleash the purchasing power for those who can afford it.
Renovation of old neighborhoods is the 2nd way for governments to stimulate the entire property related sectors.
Renovation of old neighborhoods is the 2nd way for governments to stimulate the entire property related sectors.
In China, they are called urban villages made up of old housing and infrastructure.
Not a slum by any standards, but they are old, and the people could and should be afforded with better living environment.
Not a slum by any standards, but they are old, and the people could and should be afforded with better living environment.
By renovating these neighborhoods, entire industries related to properties, from design to material to appliances will be stimulated.
The 3rd and most all encompassing way to resolve the properties crisis, is that PBOC (China's central bank) will issue loans to local governments.
These loans will be used to buy properties, which then are rented out to low income families and young people.
These loans will be used to buy properties, which then are rented out to low income families and young people.
This policy ensures the properties market return to its truest and purest form, which is the right to housing for all Chinese citizens.
The result of the 3 method will:
🔸Digest the oversupply.
🔸Avoid a hard landing by allowing properties price to appreciate within reason.
🔸Ensure housing rights to the low income families.
🔸Stimulate the construction sector by increasing demand through government investments
🔸Digest the oversupply.
🔸Avoid a hard landing by allowing properties price to appreciate within reason.
🔸Ensure housing rights to the low income families.
🔸Stimulate the construction sector by increasing demand through government investments
In China, housing, education and healthcare are seen as the 3 big mountains for the people.
Which means, all three are basic rights and must be protected. The government will never allow any of the 3 to go under.
Even for China skeptics, you're delusional if you bet against it.
Which means, all three are basic rights and must be protected. The government will never allow any of the 3 to go under.
Even for China skeptics, you're delusional if you bet against it.
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