China’s biggest cities continue to ease home-buying policies

More of China’s biggest cities are easing home-buying policies, after top leaders recently signaled a shift to aggressive measures to resolve the country’s ongoing property crisis.

Jiahui Huang (with inputs from The Wall Street Journal)
First Published29 May 2024
Guangzhou and Shenzhen, two of China’s four Tier-1 cities, on Tuesday reduced the down payments required for first-home purchases by 10 and 15 percentage points, respectively. They also lowered mortgage rates for second homes and trimmed banks’ loan prime rates.
Guangzhou and Shenzhen, two of China’s four Tier-1 cities, on Tuesday reduced the down payments required for first-home purchases by 10 and 15 percentage points, respectively. They also lowered mortgage rates for second homes and trimmed banks’ loan prime rates.

More of China’s biggest cities are easing home-buying policies, after top leaders recently signaled a shift to aggressive measures to resolve the country’s ongoing property crisis.

Guangzhou and Shenzhen, two of China’s four Tier-1 cities, on Tuesday reduced the down payments required for first-home purchases by 10 and 15 percentage points, respectively. They also lowered mortgage rates for second homes and trimmed banks’ loan prime rates.

The measures followed Shanghai’s move Monday to pare down payment requirements and ease the curbs on non-locals to buy homes.

“This policy easing reflect local governments’ echoing of central government and regulators’ rhetoric on May 17,” Morningstar analyst Jeff Zhang said, referring to a meeting of China’s top financial regulators that removed mortgage-rate floors for first and second homes. Analysts say the meeting marked a turning point, as Beijing became more aggressive about resolving a yearslong property crisis in the world’s second largest economy.

Beijing, the only Tier-1 city which hasn’t taken action, is likely to follow with similar measures soon, Zhang said.

Nomura analysts Jizhou Dong and Riley Jin said in a research note that Shanghai’s stimulus shows the government is eager to stabilize the property sector, though it is still uncertain whether demand for property will be boosted.

Investors will watch property sales in Tier-1 and Tier-2 cities in coming months as well as any specific measures from the central government to buy unfinished projects and any housing trade-in programs, analysts say.

“We expect the incremental measures to gradually drive up property demand and home prices, though it may still take a longer duration to translate into homebuying activities,” Zhang from Morningstar said.

China has been wrestling with a glut of unfinished housing projects and its giant property market in at a near standstill after tightened liquidity conditions forced some large developers to fold while a slower-than-expected economic recovery from the pandemic left many consumers on the sidelines.

Write to Jiahui Huang at Jiahui.Huang@wsj.com

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