Allowing local governments to use special bond issuance to directly purchase unsold homes could address the lack of SOE participation in the current property destocking scheme. But this approach would require a much larger amount of fiscal firepower. Meanwhile, as more cities ease controls on new home prices, the market may reach a new equilibrium more quickly, benefiting the property sector and broader economy in the long run. In the short term, though, faster prices declines could hurt sentiment, weighing on home sales and consumer spending.
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