By China’s housing minister, Ni Hong, has called for cuts on home mortgage rates and down-payment ratios for first-time home buyers in an effort to alleviate the country’s protracted property slump amidst sluggish economic growth. In a recent symposium with property developers and builders, Ni Hong suggested that home buyers who had paid off prior mortgages should be treated as first-time purchasers, a move that would significantly reduce down-payment ratios for this targeted group.
To further address the issue, Ni Hong emphasized the importance of smooth delivery of presold homes and urged property developers and builders to actively participate in public housing projects, shantytown redevelopment, and public facility construction.
These comments from the Ministry of Housing and Urban-Rural Development come after China’s top leadership hinted at future property easing during a key policy-setting meeting. The removal of the phrase “houses are for living in, not for speculation” was seen as a signal of a shift towards a more lenient policy stance on the sector.
Acknowledging major changes in the supply-demand dynamics of the property market, China’s leadership pledged to promptly adjust property policies. The government has already implemented a series of measures since last winter to counter the downward spiral induced by tight financing restrictions.
Despite these efforts, home sales continued to decline in June, negatively impacting the country’s second-largest economy. In response, Beijing is reportedly considering easing home-buying restrictions in major cities such as Beijing and Shanghai, with the aim of boosting demand.
While Beijing has recently announced several policy initiatives to support the faltering economy, it has not yet implemented significant stimulus measures, disappointing the market and prompting calls for greater policy support, including aggressive fiscal expansion.
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