Call made in China for national housing bank to prop up property

[BEIJING] China should establish a national housing bank to optimize use of the country's housing provident funds, which have over 3.7 trillion yuan (S$825 billion) at their disposal, according to an article written by an official with Ministry of Housing and Urban, Rural Construction.

A national housing bank could offer low interest rate housing loans to help middle and low income home buyers, bolstering demand in a sluggish real estate market, and reducing risks for commercial banks, the official said in the article cited by Xinhua News Agency on Monday.

Zhang Qiguang, head of the Ministry's housing provident fund supervision department, also proposed the housing fund include rural workers who seek jobs in urban areas and offer government support to help them buy homes, Xinhua said.

Just a week ago, China offered tax breaks to home buyers and reduced down payment requirements for the second time in six months, in a bid to halt a slide in house prices that is threatening to undermine the world's second-biggest economy.

The housing market is worth the equivalent of around 15 percent of China's economy, and its sluggish performance has held back economic growth and subdued activity in an array of sectors from cement to steel to glass making. Prices fell at a record annual pace in February.

Housing provident funds are a compulsory savings programme to which all Chinese workers and their employers must contribute. Employees can draw on the account when they purchase a house and may be granted preferential mortgage rates.

REUTERS