Authorities in Shenzhen, China’s technology hub, are reducing the down payment required from people buying a second home, joining a fray of big cities paring back restrictions in a bid to revive the flagging property market.
They are also scrapping a measure that had restricted the scope of buyers who can enjoy lower down payments.
The easing measures, which include lowering the down payment ratio for second houses to 40 per cent of the value of the property from as much as 80 per cent, will take effect from today, according to a notice from the Shenzhen branch of the People’s Bank of China late on Wednesday.
Shenzhen is the second tier-one city in China to lower the down payment ratios for second houses. In September, Guangzhou lowered the down payment ratio to a minimum of 40 per cent from at least 70 per cent.
At the same time, Shenzhen’s housing authority scrapped the threshold below which homebuyers qualified for lower down payments, enabling more people to benefit.
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Anger mounts as China’s property debt crisis leaves flats unfinished
Anger mounts as China’s property debt crisis leaves flats unfinished
The Housing and Construction Bureau changed the definition of “ordinary housing”, or non-luxury homes, that qualify for lower down payments. In the past, only homes valued at less than 7.5 million yuan (US$1.05 million) fell within this category, making them eligible.
The easing measures come as China’s residential property market continues to slide into the doldrums. New home prices in Beijing, Guangzhou and Shenzhen recorded month-on-month price declines ranging from 0.4 per cent to 0.7 per cent in October, while second-hand home prices in tier-1 cities fell 0.8 per cent in October versus a 0.2 per cent increase in September.
“Shenzhen is stepping up measures to boost housing demand, but we believe these are not sufficient to drive a meaningful sales recovery,” Cynthia Chan, an analyst at Daiwa Capital Markets in Hong Kong, wrote in a report. She cited sluggish sentiment among buyers amid an economic downturn and continually falling home prices.
“On a more positive note, we note the government, at both state and local level, accelerated policy support for the sector in recent weeks which, in our view, underscores that policy makers are growing anxious about the sector turmoil evolving into a systematic crisis,” Chan said.
“We believe this will pave the way for stronger measures in the near term.”
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