China's first-tier cities, including the major metropolises of Beijing, Shanghai, Guangzhou and Shenzhen, have seen encouraging signs in their property markets after introducing more supportive measures following the central bank's recent policy shift, with the lowering of down payments and interest rates spurring a purchasing boom.
Chinese authorities unveiled a slew of highly anticipated policies aimed at bolstering the property market back on May 17, with many provincial-level regions and cities moving to optimize housing finance policies to support the property sector and promote home sales.
The latest move came last Wednesday when Beijing authorities adjusted the minimum down payment ratio for individual commercial mortgages for homes from 30 percent to 20 percent for first-home purchases, according to a circular released by several bodies, including the Beijing Municipal Commission of Housing and Urban-Rural Development and the Beijing municipal branch of the People's Bank of China.
For second-home purchases, the minimum down payment has been lowered to 35 percent if the property is located within Beijing's main urban center, and 30 percent for outlying areas of the city.
The lower limits for home loan interest rates have also been decreased, based on the tenor of the benchmark loan prime rate (LPR), according to the circular.
Stimulated by these preferential policies, improved buyer sentiments have been observed in the Chinese capital with a significant increase in deals being recorded.
The latest data released by the the Beijing Municipal Commission of Housing and Urban-Rural Development showed that almost 15,000 pre-owned homes were traded in June, an increase of nearly 12 percent from May and up more than 29 percent from the same period last year.
Shanghai authorities previously introduced their own set of policies to make it easier for residents to get onto the housing market. These measures, unveiled in late May, included reducing the minimum down payment for first-time home purchases to 20 percent and shortening the social security requirement for non-local residents looking to purchase property.
Since then, multiple new housing projects in Shanghai have seen notable increases in subscription rates and customer visits, with data showing sales of new residential properties saw a substantial week-on-week growth of 116 percent in the week ending June 23.
Chen Guanglin, a local real estate agent, added that the Shanghai's second-hand housing market is also gradually heating up, with a steady rise in customer inquiries and property viewings.
"Following the introduction of the new policies, individuals who are single and have paid social security insurance for a minimum of three years are now allowed to buy properties. Therefore, there has been a noticeable increase in the number of homebuyers from this category in our assigned region, with property viewings consistently witnessing an increase of around 50 percent," said Chen. Data revealed that over the past month, the daily transaction volume of second-hand homes in Shanghai exceeded 1,000 units on multiple occasions.
In addition, Guangzhou, the capital of south China's Guangdong Province has lowered the minimum down payment for first-time home purchases to 15 percent and abolished mortgage floor rates. The minimum down payment ratio for second home purchases has been decreased drastically down to 25 percent from the previous 40 percent.
The policy changes have effectively eased the financial pressure for buying houses, further boosting confidence and stabilizing the housing market, according to industry insiders.
According to the Guangzhou Association of Real Estate Agents Association, the transaction volume for second-hand residential properties in Guangzhou in the four-week period-up to June 25 exceeded 10,400 units, up by more than 33 percent.
Meanwhile, the nearby megacity of Shenzhen also reduced the minimum down payment for first-time home purchases to 20 percent, with a minimum interest rate of 3.5 percent.
Given the continuous supportive measures from the local government, the sales volume of pre-owned homes in the city in June jumped by staggering 73 percent compared to last year.
"The monthly trading volume of second-hand houses for the past three months were all around 4,000 units, and in June, 24.1 percent of them houses were sold for 3 million yuan (over 400,000 U.S. dollars) or less, hitting the highest level since January 2023," said Tang Lixia, the research director of a real estate agency in Shenzhen.
Home sales in China's biggest cities climb as support measures stimulate market
