China’s property rescues going nowhere


Goldman continues its breakdown of Chinese property inventory rescue plans.

Following our latest note What would it take to clear China’s housing inventory? where we expected housing “trade-in” programs to be a key policy initiative to help saleable inventory digestion and stabilize the property price outlook, we observe this program has expanded to more cities (50+ by MTD-May, according to CRIC) and examine the five main mechanisms of local trade-in policies (Exhibit 1).

Amongst the varied types of trade-in models announced so far, the “acquisition model” so far has likely achieved the highest effectiveness in improving project transactions and sell-through. By participating cities: i) Zhengzhou: As the pilot city to announce acquisition model, by end-Apr, 194 units of existing housing units had passed the initial evaluation and trade-in intention was confirmed on c.30 housing units; ii) Nanjing: Project visits significantly improved in central and nearby outskirt districts since Labor Day holiday, according to CRIC. iii) Wuxi: first batch of 25 units completed “trade-in” by end-Apr, recording total transaction value of Rmb100mn+.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.