(Yicai) Oct. 17 -- China is rolling out more measures to boost the real estate sector, including supporting  urban village and dilapidated housing renovation projects, increasing the size of credit on the ‘white list’ of real estate projects and helping local governments to use the proceeds from special bonds to buy back land that is lying idle, the minister of housing and urban-rural development said today.

China will renovate an additional one million units of urban villages and dilapidated houses by providing monetary compensation to residents, Ni Hong said at a press conference.

Given that the renovation drive is large and it specifies using monetary compensation to help residents find other places to live, it will directly result in a jump in property sales in core cities and will also curb the slump in prices, said Song Hongwei, research director at Tospur Real Estate Consulting.

Around 60 percent of the funds that Shanghai spends on resettling people will return to the local real estate market, according to Tospur Research Institute. Based on the scale of this round of renovations, this could drive the purchase of 600,000 apartments.

Also, there are much more than one million such housing units in the country that need renovation, Ni said, citing a research paper. In 35 medium-sized and big cities, there are 1.7 million units that need revamping. And if we were to look at the whole country, the number would be even bigger.

White List

All eligible real estate projects will be included in the financing ‘white list,’ or approved list, and their reasonable financing needs will be met through loans, Ni said. The white list, which was launched in January, allows local authorities to recommend suitable real estate projects to financial institutions for financial support.

So far, CNY2.2 trillion (USD313.1 billion) worth of loans have been extended to developments on the ‘white list,’ Xiao Yuanqi, deputy head of the National Financial Regulatory Administration, told reporters. And this should top CNY4 trillion (USD561.3 million) by the end of the year.

The expansion of the 'white list' scheme helps guarantee the on-time delivery of unfinished apartments and will boost market confidence, said Yan Yuejin, deputy director of the think tank E-house China R&D Institute in Shanghai.

Special Bonds

The government will also support local governments to use the proceeds from special bonds to reclaim land that is lying idle, Ni said.

The Ministry of Finance said previously that local governments should use special bonds to reclaim unused land and buy unsold residences that are still on the market for use as affordable housing.

Specific details on the above policies will soon be released in order for them to be implemented as soon as possible, said Song Qichao, assistant to the finance minister.

It is necessary to increase the use of special bonds to buy land amid the current market situation as this will help stabilize the property market and special bonds will serve as an additional source of funds, analysts said.

Editors: Shi Yi, Kim Taylor