Cool­ing Down

Bei­jing raises the thresh­old for hous­ing prov­i­dent fund loans to reg­u­late the prop­erty mar­ket

Beijing Review - - BUSINESS - By Li Xiaoyang

Since the au­thor­i­ties in Bei­jing is­sued new hous­ing prov­i­dent fund rules ear­lier this month, the staff at Lian­jia, China’s largest real es­tate chain, say their phones rang non-stop for sev­eral days. The calls were from fran­tic buy­ers try­ing to speed up the deals be­fore the new rules came into ef­fect.

The hous­ing prov­i­dent fund re­quires em­ploy­ers and em­ploy­ees to con­trib­ute to a pool which is later used to make mort­gage loans to par­tic­i­pants. One key el­e­ment of the new rules is­sued on Septem­ber 13 is a cap on the amount of money as­pir­ing buy­ers can bor­row from the fund.

From Septem­ber 17, Bei­jing res­i­dents can bor­row 100,000 yuan ($14,537) from the fund if they have con­trib­uted to the pool for a year, up to max­i­mum 1.2 mil­lion yuan ($174,455) for first-home buy­ers. The max­i­mum amount sec­ond-home buy­ers can bor­row from the fund has been low­ered from 800,000 yuan ($116,303) to 600,000 yuan ($87,227).

Data from, a real es­tate web­site, showed that 3,363 con­tracts to buy new houses were signed be­tween Septem­ber 13 and 16, a 453.13-per­cent in­crease on new house pur­chase con­tracts from the cor­re­spond­ing pe­riod last month.

The in­tro­duc­tion of the rules in­di­cates the ne­ces­sity to rein in the real es­tate mar­ket, par­tic­u­larly af­ter soar­ing hous­ing prices in the pre­vi­ous years spurred con­cerns about as­set bub­bles, es­pe­cially in first-tier cities.

“The new rules aim­ing to cool down the house mar­ket re­flect the au­thor­i­ties’ de­ter­mi­na­tion to push ahead with the pol­icy that ‘houses are for liv­ing, not for spec­u­la­tion,’” a veteran Lian­jia agent sur­named Kuang told Bei­jing Re­view.

Buy­ing ra­tio­nally

The new reg­u­la­tions came af­ter the Po­lit­i­cal Bureau of the Com­mu­nist Party of China Cen­tral Com­mit­tee held a meet­ing in July 2018, de­cid­ing to reg­u­late the prop­erty mar­ket and curb the rise in hous­ing prices. The rules sig­nal the au­thor­i­ties’ de­ci­sion to con­trol spec­u­la­tion fol­low­ing last year’s rules to ef­fec­tively cool down the siz­zling prop­erty mar­ket.

Ac­cord­ing to the Bei­jing Mu­nic­i­pal Hous­ing Prov­i­dent Fund Man­age­ment Cen­ter, the new rules aim to make res­i­dents pur­chase hous­ing more ra­tio­nally and en­cour­age rent­ing in­stead.

Kuang be­lieves the ad­just­ment will have no real im­pact on the well-heeled who buy high-end houses with large gross floor ar­eas, be­cause the ceil­ing of the fund loan is 1.2 mil­lion yuan, and those buy­ers mainly rely on com­mer­cial loans.

“How­ever, those in­tend­ing to buy smaller sec­ond-hand houses will be im­pacted,” he said, adding that the pol­icy will take a toll on mar­ket sen­ti­ment.

The new rules have also in­creased the down pay­ment ra­tios, for both new and sec­ond-hand houses. For first buy­ers of or­di­nary hous­ing the down pay­ment is a min­i­mum of 35 per­cent of the to­tal price. For sec­ond-home buy­ers, the down pay­ment ra­tio is a min­i­mum of 60 per­cent. Af­ter this ad­just­ment, the down pay­ment ra­tios for both prov­i­dent fund loans and com­mer­cial loans are at sim­i­lar lev­els.

Sta­tis­tics by prop­erty in­for­ma­tion provider Real­data show that over 50 per­cent of the house buy­ers ap­ply­ing for prov­i­dent fund loans in Bei­jing are aged be­tween 30 and 40. In 2017, mid- and low-in­come

Peo­ple look at mod­els of a hous­ing project in Foshan, south China’s Guang­dong Prov­ince, on March 25, 2017

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