SHANGHAI: Last Thursday’s decision to ease home purchase restrictions in both Beijing and Shanghai is expected to stimulate the local real estate markets and boost confidence in the industry’s recovery, experts say.
If the market perks up soon, it would mark a clear signal that the spirit of the tone-setting Central Economic Work Conference is being upheld at local levels, they said.
Last Thursday, both Beijing and Shanghai, China’s two biggest cities, announced adjustments to their existing home purchase policies in favour of trading in the housing market.
The Beijing municipal government issued a notice redefining ordinary housing and personal home loans.
New measures lowered the down payment on first homes to 30% from 35% for ordinary housing and to 30% from 40% for non-ordinary housing.
The minimum down payment ratio for second homes is reduced to 50% from up to 80% in the six districts in the downtown area, and to 40% from up to 80% in the six districts in the suburban area.
Shanghai introduced similar policy changes, including lowering the minimum first-home down payment ratio to 30% from 35%, that for second homes to 50% from up to 70% in urban districts and to 40% from 70% in the city’s six suburban districts.
More residential properties are now eligible to be identified as ordinary housing, which will enjoy value-added tax exemption if the ownership period exceeds two years.
“Both Beijing and Shanghai used to have stringent requirements for home purchases. But last Thursday’s measures are in line with market expectations.
“The new policies will greatly lower home purchase cost, stimulate market activities, help stabilise home prices, facilitate the recovery of industry confidence and stabilise the housing sector nationwide,” said Chen Wenjing, director of research at the China Index Academy.
Beijing’s new rules also extended the maximum loan tenure from 25 years to 30 years, lowered minimum interest rate requirements for both first and second homes, and extended the definition of ordinary housing.
For example, in Beijing, in the past, ordinary housing was supposed to be no bigger than 140 sq m; now, however, flats sized 144 sq m or smaller can be regarded as ordinary housing.
“The differentiated measures for first and second homes, and for housing in and around city centre and suburbs, will facilitate better implementation of industry integration strategies in accordance with the local conditions,” said Yan Yuejin, director of Shanghai-based E-house China Research and Development Institution.
According to Yan, the previous definition of ordinary housing in Beijing was finalised in 2014, but due to the continued rise in home prices over the past few years, a number of apartments can no longer be called ordinary housing, which means more down payment and more taxes for home buyers. — China Daily/ANN
