This from ING on:
media reports that policy banks in China are going to provide CNY200bn in special loans with funds from the Ministry of Finance and the PBoC.
But, says ING:
With an estimated 225 million sqm of uncompleted housing, and assuming that the construction cost is CNY3000 per sqm, the total cost required to complete unfinished homes is CNY675bn. So, the government’s special loan is only enough to deal with around 1/3 of uncompleted homes, unless the average unfinished project is already more than 2/3 completed.
We think that some developers sold homes at a much earlier stage of completion, meaning that the special loan pool would need to be bigger to calm the market further. But if this policy enables construction to keep going, without compromising quality of finished units, this could result in an improvement in sentiment as mortgage borrowers see homes completed satisfactorily.
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At least 200bn is a start, although ING say its not enough but should make a difference at the margin.