China unveils raft of home-buying rules in bid to prop up slumping property market and economy
- Households with at least one member who does not have a home registered under their name can be counted as ‘first-time buyers’ and qualify for lower loan rates
- More people to be counted as first-time homebuyers, which will allow them to enjoy lower mortgage rates
Households that do not have a house registered under any one member of a family can be counted as “first-time homebuyers” and enjoy cheaper mortgage rates, according to a statement issued on Friday by the Ministry of Housing and Urban-Rural Development, the People’s Bank of China, and the National Administration of Financial Regulation and reported by the Xinhua News Agency. They can also apply for lower down payments.
Local governments can also choose to selectively adopt the policy based on their needs.
“The policy will play a role in adjusting credit and mortgage loan rates in big cities, and efficiently cut some of the costs for homebuyers,” said Yan Yuejin, director of Shanghai-based E-house China Research and Development Institution.
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For example, the ratio of down payments for second-home buyers has crossed more than 70 per cent in some cities, but now it probably can be lowered to 35 per cent, according to the new policies, Yan said. “This means the down payment for a home worth 5 million yuan (US$686,500) can be cut to 1.75 million yuan from 3.5 million yuan.”
The measures echo pledges made after the July Politburo meeting chaired by President Xi Jinping, when the “housing is for living, not for speculation” mantra was dropped for the first time since 2018, signalling a more supportive stance for the nation’s faltering real estate industry.
The measures also coincided with an announcement by Chinese authorities on Friday to extend individual income tax rebates for some homebuyers. Homeowners who sell an existing home and buy a new one in the same city can seek income tax refunds up to 2025, according to a statement jointly issued by the Ministry of Finance, State Administration of Taxation and the Ministry of Housing and Urban-Rural Development.
Homebuyers can also seek full tax rebates if their newly bought home is more expensive or the same as the one they have sold, it added.
The series of easing measures on home purchases comes amid rising concerns about China’s property sector and its impact on financial institutions.
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China’s top 100 developers saw their contracted sales slip 33 per cent to 350.4 billion yuan year on year in July, according to Chinese property consultancy CRIC.
The Hang Seng Mainland Properties Index, a gauge of major Hong Kong-listed mainland developers, rose 1.4 per cent to 1,546.81 on Friday, narrowing the losses so far this month to 12 per cent.
