China lowered the down payment for those who use their housing provident funds to buy a second home, signaling its intention to prop up the property market in a time of battered confidence.
In a statement jointly released by the Ministry of Housing and Urban-rural Development, Ministry of Finance and the central bank on Aug 31, the minimum payment for buyers who use their housing funds to buy a second home was lowered to 20 percent from 30 percent, if buyers had paid off their previous mortgage.
The statement also said the four most expensive cities in China－Beijing, Shanghai, Guangzhou and Shenzhen－could decide by themselves whether to follow the move.
The move will give second-home buyers the same policies enjoyed by first-time buyers, which would encourage more potential buyers to purchase second homes. The move followed the interest rate cut on Aug 25, after which the benchmark lending rate for five-year or longer loans was lowered to 5.15 percent. The same rate for housing provident fund loans was lowered to 3.25 percent, the lowest in history.
The interest rate cut was followed by decision on Aug 27 to ease previous restrictions on foreign institutions and individuals buying properties in China.
China’s real estate investment growth further slumped to 4.3 percent in the first seven months, according to the National Bureau of Statistics. It was still a drag on GDP that is growing at 7 percent, but analysts believe investment has already hit the bottom as property sales have rebounded since the second quarter, also due to policy easings.
The latest survey of home prices, released on Aug 31, showed the average home price in 100 cities monitored by China Index Academy, a research company owned by SouFun Holding, rose 0.95 percent in August, an acceleration from July’s 0.54 percent growth.
The batch of stimulus policies, combined with fresh construction projects offered in the market, will make for robust housing sales in September and October, China Index Academy said.