China approves guidelines to boost affordable housing amid property debt crisis

China's cabinet on Friday approved guidelines for planning and construction of affordable housing at a meeting chaired by Premier Li Qiang, state media Xinhua news agency reported.

The Chinese property sector is in a deepening crisis with a rising risk of default among some developers as they struggle to sell apartments and raise funds.

Xinhua didn't give details of the new cabinet guidelines, but it cited the cabinet as saying they would expand investment and promote the healthy development of the property market.

Separately, China's central bank announced guidance on relaxing residential housing loan rules, in a move aimed at boosting loan applications and house purchases.

The People's Bank of China said that banks should treat those without a house in their names at the location of a purchase as first-time home buyers, regardless of whether they have previously used a loan for a home purchase.

The central bank also said it would stick to the principle that houses are for living in and not vehicles for speculation.

Beijing has been promoting more affordable housing in recent years as runaway home prices in major cities shut out many young buyers – a plan that has assumed greater significance in the wake of the debt crisis in the property sector and weakening economic growth.

An official at the Ministry of Housing and Urban-Rural Development said last year that China would add 6.5 million new low-cost rental housing units in 40 major cities in 2021-2025.

However, with the property downturn, official data showed new home prices fell in July for the first time this year, underlining an urgency for bolder policy support.

On Friday, the housing ministry, the central bank and the national financial regulator also jointly issued a notice easing mortgage policies to help revive the sector.

China's housing market has over the past two years been grappling with a severe debt crisis – initially triggered by government moves to rein in ballooning debt.

The cabinet on Friday also approved plans to develop the pharmaceutical and medical equipment industries during 2023-2025, as it vowed to expand the country's supply capacity of high-end medicines and key technologies, according to Xinhua.