Various regions in China are enhancing local funds that support home buyers after central authorities released plans to boost consumption and promote stability in the real estate market.
On Sunday, China unveiled a new plan to expand consumer spending, which is expected to encourage consumption and drive economic growth in the country. For the first time, the consumption support plan emphasizes the need to stabilize the stock and real estate markets.
To meet housing consumption needs in an improved manner, efforts will focus on curbing the downturn and restoring the stability of the real estate market, according to the plan.
Meanwhile, major cities including Shenzhen, south China's Guangdong Province, have announced new policies of their own to boost local housing markets.
Effective March 24, the city will raise the maximum basic loan amount for individual home purchase applications from 500,000 to 600,000 yuan (about 69,149 to 82,979 U.S. dollars), while the limit for family applications will increase from 900,000 to 1.1 million yuan.
Adjustments have also been made to the maximum limits for housing provident fund loans -- local programs in many Chinese cities that allow residents to pay into a pool through their employer, then retrieve money from the fund when they are ready to buy a home. In many cases, the funds also provide low-interest loans.
For first-time home buyers borrowing from the fund in Shenzhen, the floating rate will be raised from 20 percent to 40 percent, while the floating rate for families with multiple children looking to buy a home will increase from 10 percent to 50 percent.
Central China's Henan Province has rolled out new policies aimed at optimizing loan thresholds and loan amounts for home purchases.
According to the new policies, the maximum loan amount for acquiring owner-occupied housing in the urban area of Zhengzhou, the provincial capital, has been increased from 1 million to 1.2 million yuan. Families with multiple children can now access a maximum loan amount of 1.44 million yuan.
Guilin City of south China's Guangxi Zhuang Autonomous Region has reduced the minimum down payment ratio for housing provident fund loans intended for purchasing government-subsidized housing from 20 to 15 percent.
The city has also facilitated withdrawals from the local housing provident fund for loans related to second-home purchases, thereby lowering the threshold for home purchases and alleviating the financial pressure on middle- and low-income families.
"The policies are city-specific, allowing housing provident funds to align their quotas with the local real estate market's actual conditions. More importantly, these policies have greatly strengthened the support of housing provident funds for residents' housing consumption, which helps more depositors use these funds to meet their housing needs," said Wu Jing, Associate Professor from the Department of Construction Management under Tsinghua University.
Since last year, Chinese policymakers have introduced a range of measures, including financial stimuli and regulatory adjustments, to bolster the property sector. These include mortgage rate cuts, decreased down payment requirements, eased purchasing restrictions and financing coordination mechanisms to enhance funding support for developers.
Chinese cities ease access to local housing funds in bid to boost real estate markets
