China rolls out property policies to boost demand, fix real estate crisis

A flurry of Chinese cities are rolling out measures to boost housing demand, signaling the government’s intention to arrest a property crisis. 
 

Various local governments have issued at least 70 property easing measures since President Xi Jinping’s Politburo called for efforts from local governments to defuse the property crisis. Among them include a cut to the minimum down payment ratio, and asking parents to help children with home purchases by drawing on their own housing provident funds.

China’s $2.4 trillion new-home market has shown little sign of recovery, adding to the woes of an economy that barely expanded in the second quarter. Mortgage boycotts by homebuyers waiting for apartments to be completed have damped consumer confidence, putting further pressure on home prices, which have fallen for 11 straight months.

While the central government has avoided outright stimulus, it’s been giving tacit approval to local authorities to unwind property austerity measures. 

In late August, the state council led by Premier Li Keqiang said local governments should use city-specific credit policies to support necessary housing demand. Similar signals were issued in April, after the Communist Party’s Politburo led by President Xi Jinping said local governments could “refine” housing measures to ensure stability in the property market. 

Chinese cities are likely to continue optimizing property policies based on their own situation, adopting measures such as improving financing conditions of local property developers, Golden Credit Rating analyst Wang Qing was cited as saying. 

Here are some of the policies coming out from local governments: 

1. A few so-called tier 2 cities, or regional hubs, lowered down payment thresholds for a second residence for as much as 20 percentage points. Those cities include Nanjing, Suzhou and Wuxi.
2. At least 24 Chinese cities have allowed parents to fund their children’s home purchases by drawing on their own housing provident funds and helping repay their mortgages, the Securities Daily said on Sept. 9.
3. The southern Chinese city of Liuyang announced home-purchase subsidies and more credit support, the China Securities Journal reported Monday.
4. Northern Langfang city, which is about a one-hour drive from Beijing, said on Aug. 9 that it would unwind austerity measures including a ban that restricted non-locals from buying property Changchun, the capital of northern Jilin province, plans to give out home-buying subsidies.
5. Shanghai said on Aug. 20 it would eased buying curbs in the suburban Lingang area, home to advanced manufacturers including Tesla Inc. Non-locals working for companies there are now allowed to buy one residence after a year.
6. Some cities, including Taizhou in eastern Jiangsu province, adjusted downpayment requirements for home buyers backed by the provident fund