China’s capital city of Beijing eased homebuying requirements for downpayment and mortgages, joining the country’s other mega cities to support the real estate sector.
Beijing reduced downpayment requirements by 10 percentage points to a minimum of 20% for first-time buyers, the capital city said in a statement Wednesday. For second homes, the threshold is lowered to a minimum of 35% for urban areas and a minimum of 30% elsewhere. The city also lowered floor on mortgage rates.
The move means all four so-called tier-1 cities have now followed through with easing after the central government unveiled a package to unleash 300 billion yuan ($56.04 billion) of funding to buy unsold homes. Shanghai, Shenzhen and Guangzhou slashed downpayment requirements and allowed room for cheaper home loans last month in a bid to revive demand.
China’s three-year housing slump has pummeled the economy and continues to afflict even its biggest urban centers. Investors and analysts remain skeptical that existing measures will be sufficient due to the limited central bank funding revealed so far and the slow progress of existing trial programs in several cities.
Beijing also eased home-buying rules further for families with at least two children. Such families can enjoy downpayment threshold and mortgage rates applied for first-home buyers even if they are purchasing their second residences.
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Beijing faces the worst oversupply among 30 major cities tracked by China Real Estate Information Corp. Its new home inventory needs 48.9 months to sell, CRIC estimated before the easing announcement.
The capital’s new-home prices slumped 1.1% in May, the worst drop in almost a decade, latest official data showed.
Top policymakers urged officials in a cabinet meeting earlier this month to keep an “open mind” over measures to reduce housing inventory and be more “creative and bold” in rolling out support.
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It would take more than four years to offload the nation’s 60 million unsold apartments without government aid, according to Bloomberg Economics.
Chart: Bloomberg
