Beijing and Shanghai Lower Home Purchase Barriers to Boost Real Estate Market

BEIJING AND SHANGH INTRODUCE NEW HOUSING POLICIES TO BOOST DEMAND

To stabilize the real estate market, China’s two largest cities – Beijing and Shangh – have unveiled policies med at making homeownership more accessible through reduced down payment requirements and lower mortgage interest rates.

On Thursday, the Beijing Municipal Commission for Housing and Urban-Rural Development in conjunction with four other departments announced that as of January 1st, 2024, the down payment ratio for a first home buyer would be lowered to 30, while for those purchasing their second property it will drop to 40.

This initiative is part of a broader strategy to redefine general housing and provide reduced VAT value-added tax on property transactions to make these homes more affordable. It's estimated that this change could increase the proportion of general housing in Beijing by approximately 70, thereby granting many families access to VAT benefits.

That same day, Shangh followed suit with similar adjustments, lowering the down payment requirement for second-home purchases from a minimum of 50 to 40 across six specific districts and the Lin-gang Special Area. The city also announced reductions in mortgage interest rates effective immediately.

Yan Yuejin, Research Director at the E-House China RD Institute based in Shangh noted that these measures targeting both essential and improved housing needs are expected to receive positive market feedback. These new policies align with market expectations, Yan sd. They're likely to boost confidence in the real estate sector and contribute to a stabilization of market expectations.

This year has seen multiple local governments across China adopt measures easing homebuying restrictions, including implementing a policy that recognized homes over loans for first-time buyers regardless of previous mortgages. The m is to allow more individuals to benefit from discounts on their first-home purchases.

The real estate sector is crucial to China's economy but has experienced slowdowns in recent years. In 2022, the Chinese cities’ average new home prices declined for the first time in seven years, according to data from the China Index Academy.

To counteract this downturn, developers in various cities have adopted unconventional sales tactics to attract buyers – offering free flights, providing funds for farmers seeking urban properties, and in some cases even proposing a buy one get one free deal on properties in Shenzhen.

This week's policies signify steps towards revitalizing the market and promoting homeownership through reduced financial barriers.

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Editor: Apurva.
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