Min­i­mum down pay­ment low­ered to boost prop­erty sec­tor

China Daily (Canada) - - TOP NEWS - By REUTERS

China on Wed­nes­day said it will cut the min­i­mum down pay­ment level for first-time home buy­ers in many cities, step­ping up sup­port for the slug­gish prop­erty mar­ket and stum­bling econ­omy.

It was the sec­ond mea­sure in two days in­tended to fire up con­sump­tion, fol­low­ing a gov­ern­ment de­ci­sion to halve the tax on the sale of small cars.

The cen­tral bank and bank­ing reg­u­la­tor said they would be low­er­ing min­i­mum down pay­ments for first-time home buy­ers to 25 per­cent, from the pre­vi­ous 30 per­cent, in cities that do not have re­stric­tions on pur­chases.

The move is in­tended to “sup­port rea­son­able con­sump­tion of hous­ing”, the Peo­ple’s Bank of China and the China Bank­ing Reg­u­la­tory Com­mis­sion said in a state­ment on the cen­tral bank’s web­site on Wed­nes­day.

China’s prop­erty sec­tor has hit a weak patch in the past year or so, with slow­ing sales lead­ing to an over­hang of un­sold apart­ments and af­fect­ing de­mand for ev­ery­thing from steel to home ap­pli­ances and fur­ni­ture.

“The re­laxed rule is help­ful, but the im­pact will not be im­me­di­ate be­cause the main rea­son for high in­ven­tory in some cities is bad lo­ca­tion and trans­porta­tion,” said David Ji, the greater China head of re­search and con­sult­ing at Knight Frank.

“The new rule will likely stim­u­late de­mand from buy­ers who are al­ready ob­serv­ing on the side­lines and help them to get into the mar­ket,” Ji added.

The prop­erty sec­tor ac­counts for 15 per­cent of China’s gross do­mes­tic prod­uct, so even mod­est signs of im­prove­ment would re­lieve some pres­sure on the econ­omy, which is ex­pected to ex­pand this year at its slow­est pace in a quar­ter of a cen­tury.

Home prices rose for the fourth con­sec­u­tive month in Au­gust as sales and mar­ket sen­ti­ment im­proved, a rare bright spot in an oth­er­wise gloomy eco­nomic out­look.

An­a­lysts do not ex­pect a full-blown turn­around in the prop­erty mar­ket any­time soon, since the huge num­ber of un­sold homes dis­cour­ages con­struc­tion and in­vest­ment in all but the big­gest cities.

Wed­nes­day’s move is the latest step aimed at sup­port­ing a sec­tor seen as piv­otal to eco­nomic growth.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.