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China is expected to announce new measures to resolve its housing crisis and stimulate growth
China’s housing prices fell in the first four months of the year even as industrial production rose nearly 7%, according to data released on Friday, as the country prepares to announce new measures to reinvigorate its property industry in difficulties.
Officials at the Office of National Statistics acknowledged that domestic demand – consumer and business spending – remained “insufficient” and said the government was considering other ways to revitalize the property industry after house prices fell 9.8% between January and April in relation to the previous year.
Liu Aihua, spokesperson for the department, said that in accordance with the policies set by the Communist Party leadership, there is a need to find ways to balance supply and demand, meet public expectations in terms of high-quality housing and “seize the opportunity to build a new model of high-quality development of the real estate sector.”
The State Council, China’s Cabinet, said it would hold a press conference on Friday focusing on the real estate industry.
China’s property market slumped after a crackdown on excessive debt by property developers several years ago, dragging down a wide range of other companies with it and slowing growth in the world’s second-largest economy.
Dozens of developers, whose legions of high-rise apartments have transformed urban landscapes across China, have defaulted on their debts.
The government cut interest rates and released billions of dollars in financing to help developers in financial difficulties deliver promised and paid-for housing.
Some local governments are buying up unsold apartments due to weak demand, with plans to rent them out as affordable housing in experimental programs that could become national policy.
Financial media outlet Caixin reported that the Ministry of Housing, the central bank, other government agencies and state banks were creating a joint working group to brainstorm ways to revitalize the industry.
China’s economy it grew at a robust rate of 5.3% in the first quarter of this year, but that is relatively slow for a developing economy, and signs of weakness have persisted.
The report published on Friday by the National Bureau of Statistics showed that industrial production increased by 6.7% in April from the previous year and investment in fixed assets such as factory equipment increased by 4.2%.
But housing starts fell nearly 25% from the previous year and sales measured by floor area fell 20%. Financing for real estate projects fell 25%.
Retail sales increased just 2.3% in April.
Officials said they expect demand to recover as the government implements policies aimed at getting families to sell old cars and appliances and buy new ones.
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Associated Press researchers Yu Bing and Wanqing Chen in Beijing contributed to this report.