China's preferential lending initiatives aimed at public housing are drawing an increasing number of investments into public housing schemes, which is expected to provide more affordable homes to those financially constrained buyers.
Encouraged by the initiatives, a housing rental company in southwestern municipality Chongqing is borrowing over 2.7 billion yuan (over 370 million U.S. dollars) to purchase 13 commercial properties which will be remodeled to public rental homes.
"By the end of this year, we have invested in 1,000 government-subsidized housing apartments, and we'll invest in another 3,000 units in the first half of next year," said Zhang Qianhua, project leader of the company.
This year, the People's Bank of China (PBOC) initiated a 300 billion yuan (about 41.11 billion U.S. dollars) re-lending program for state-owned entities to purchase and convert commercial homes into public housing units.
Under this program, banks in Chongqing have issued loans totaling 350 million yuan (about 47.96 million U.S. dollars) for the purchase and conversion of the first batch of nearly 1,000 government-subsidized housing units.
"From the two projects in which loans were issued by Chongqing, this policy provides support for banks to achieve a new model of a commercial and sustainable real estate service. It helps achieve a win-win situation for developers, residents and banks, and build a new model of the real estate industry," said Feng Ju, the deputy general manager of the financial business department at the Industrial and Commercial Bank of China's Chongqing branch.
"This policy is conducive to digesting the existing housing, and make use of existing commercial housing assets. It's also conducive to increasing the supply of government-subsidized housing, and better meet the rigid housing needs of residents," said Wang Hong, head of macroprudential regulation office of the PBOC branch in Chongqing. Apart from the real estate sector, China has also been rolling out financial tools to support scientific and technological innovations in the country, including a 500 billion yuan re-lending program co-founded by the PBOC and Ministry of Science and Technology.
"China has 20 structural monetary policy tools, focusing on the needs of key areas, weak links and business runners in the real economy, aimed at helping the country's economic structure transformation and upgrading, and promoting the formation of new drivers such as green development, scientific and technological innovation," said Dong Ximiao, chief researcher of Merchants Union Consumer Finance Company.
China's preferential lending initiatives draw more investments into public housing
