Chinese authorities are considering easing home buying restrictions in the nation’s biggest cities, potentially removing a hurdle that has curbed demand in Beijing and Shanghai for years, according to people familiar with the matter.
Regulators are weighing scrapping rules that disqualify people who’ve ever had a mortgage - even if fully repaid - from being considered a first-time homebuyer in major cities, said the people, asking not to be identified discussing a private matter. Currently homebuyers with a mortgage record who don’t own a property are still subject to the higher down-payment and more restrictive borrowing limits applied to those buying a second home.
Some state banks have submitted relevant mortgage data and feedback to the regulators over the past months, one of the people said. The plans are under discussion and have yet to be approved, they added.
China’s existing policies have failed to sustain a rebound in the property market as price slumps extend across the nation, putting the government’s 5% growth target at risk. Gross domestic product figures released Monday showed the recovery lost momentum in the second quarter, intensifying calls for more stimulus.
Policymakers have so far been cautious about rolling out broad support, instead relying on targeted measures to boost household spending such as extending tax exemptions on electric car purchases. The government also took a step toward supporting the ailing property market by extending loan relief for developers this month, adding to a slew of measures in a sweeping 16-point rescue package last year.
While many local governments in smaller cities have eased or even reversed home buying restrictions over the past year, the official stance toward mega cities has remained unchanged.
The central bank and the housing ministry didn’t immediately respond to requests seeking comment.
Investors are counting on the meeting of the Communist Party’s Politburo this month to provide clues about policy thinking after recent comments from the central bank raised hope that more measures are in the cards.
Zou Lan, head of the monetary policy department at the People’s Bank of China, said on Friday that real estate policies will be “tailored” to cities, and the policies that were rolled out when the market was overheated can be “optimized marginally.”
For years, China has sought to suppress real estate demand in the biggest cities by treating buyers with previous mortgages as second-time purchasers, substantially raising down payment thresholds and increasing borrowing costs. In the capital of Beijing, a second-time buyer needs to come up with a down payment of as much as 80% of the property’s value. The down payment is just 40% for first-time buyers.
The change, if approved, will allow buyers who have sold their properties to enjoy the lower down payment despite their mortgage records.
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The government also plans to shore up investments through urban redevelopment projects, aimed at refurbishing run-down areas.
China’s housing ministry called for more redevelopment projects this week, saying the focus would be on building elevators in run-down apartments.