(Yicai Global) Oct. 13 -- A number of local governments in China are buying or plan to buy commercial housing projects to boost market confidence and get needed funds back into the hands of real estate developers.

The Suzhou city government said on Oct. 11 that it would repurchase about 10,000 newly-built homes. Industry sources said such buybacks may also account for some of September’s 127 percent month-on-month surge in Suzhou’s commercial housing transactions.

The Luohu district government in Shenzhen also proposed in a document released on Oct. 9 to include existing homes and commercial apartments as a rental housing source. Jinan City Development Group, a vehicle of that city’s state-owned assets manager, announced on Sept. 7 that it planned to acquire 3,000 homes that would be subsequently let out.

Since the problem of unfinished residential building projects emerged in July, local authorities in China have brought in measures to ensure their delivery, including buying back units as a source of affordable homes and rentals and introducing funds from local state-owned enterprises and financial institutions to revitalize them.

Allowing local governments to repurchase new houses is not a novelty in itself and can strengthen market confidence, accelerate the return of funds to developers, and expand the number of affordable homes for the government, Yan Yuejin, research director at E-House Real Estate Research Institute’s Think Tank Center, was reported as saying by The Paper.

But local government intervention is not a panacea. The property market’s recovery still depends on individual homebuyers.

“Although the buyback of commercial houses can play a positive role in the market and alleviate the shortage of cash flow of developers in the short term,” according to Wang Xiaoqiang, chief analyst of Zhuge House Seeking’s data research center, “the recovery of the real estate market will still rely on buyers to restore confidence in the long run.”

The China Real Estate Information Corporation believes that thanks to an array of real estate promotion policies, the market will stabilize soon, but differences among cities will widen.

Editor: Futura Costaglione