Beijing, Shanghai Introduce New Housing Policies to Spur Demand
In efforts to stabilize the real estate market, Beijing and Shanghai, China’s two largest cities, have announced policies to ease homeownership.
These measures include reduced down payment requirements and lower mortgage interest rates, which have the aim of supporting first-time buyers and improving housing affordability.
On Thursday, the Beijing Municipal Commission for Housing and Urban-Rural Development, in collaboration with four other departments, announced that starting Jan. 1, 2024, the down payment ratio for a first home in Beijing will be reduced to 30%, and the minimum for a second home will be 40%.
This is part of a broader policy shift that includes redefining “general housing,” leading to lower VAT for homebuyers. According to domestic media reports, these changes are expected to increase the proportion of general housing in Beijing to about 70%, enabling more families to benefit from VAT incentives on property transfers.
The same day, Shanghai also announced policy adjustments, including reducing the down payment requirement for second-home purchases to 50%, and further to 40% in six specific districts and the Lin-gang Special Area. City authorities also reduced mortgage interest rates, effective Friday.
Yan Yuejin, a research director at the E-House China R&D Institute in Shanghai, told Sixth Tone that the new measures, aimed at addressing both essential and improved housing needs, are expected to receive positive market feedback.
“The new policies are in line with market expectations,” said Yan. “They are likely to boost market confidence and contribute to stabilizing market expectations.”
Several cities across the country have announced a slew of policy changes this year aimed at loosening homebuying restrictions.
In September, multiple local governments adopted a policy of “recognizing homes, not recognizing loans.” This meant that even those with previous mortgages would now qualify as “first-time homebuyers,” allowing more individuals to benefit from discounts on first-home purchases.
A cornerstone of China’s economy, the real estate sector has shown signs of slowing in recent years. According to data from the China Index Academy, new home prices in the country’s 100 largest cities in 2022 declined for the first time in seven years.
The downturn has prompted housing developers in several cities to adopt unconventional sales tactics. For instance, some provided free flight tickets to attract buyers, while the northeastern Jilin province introduced a 100 million yuan ($14.7 million) fund to help farmers buy urban properties. Some developers in the southern city of Shenzhen even offered “buy one, get one free” deals to boost sales.
(Header image: IC)