A residential compound in Shanghai, September 2, 2023. / CFP
China's housing market has recently seen a series of forceful policy changes, which analysts believe will lead to a gradual rebound in the sector in the coming months, driven by the recovery in larger cities.
These policy changes include reducing the down payment ratio, cutting existing mortgage interest rates, and relaxing requirements for first-home buyers.
The reduction in down payment ratio will help alleviate the financial burden on residents and create a more favorable environment for property market stabilization and recovery, Bruce Pang, chief economist and head of research at JLL Greater China, told CGTN.
Slashing interest rates on existing and new mortgages will cater to housing needs and improve residents' consumption ability and willingness, Pang added.
However, he cautioned that monetary policy alone cannot solve all the structural issues in the real estate market. Each locality must adjust and optimize its real estate policies according to their own specific conditions, in order to achieve long-term stabilization and health in the market, he also emphasized.
A salesperson introduces commercial housing to clients in north China's Shanxi Province, June 21, 2023. /CFP
The relaxed requirements for identifying first-home buyers in Beijing, Shanghai, Guangzhou, and Shenzhen, have gained significant attention on China's main microblogging social platform Sina Weibo, with 110 million views in just one day under a single tagline, demonstrating public enthusiasm.
The threshold and cost of buying a house is set to drop significantly. For example, in Beijing, the down payment ratio for a condo will be lowered, resulting in a decrease of 1 million yuan ($140,000) for the down payment of a house priced at 4 million yuan. The mortgage interest rate will also drop by 50 basis points, from 5.25 percent to 4.75 percent. This reduction in interest rates has the potential to save borrowers 260,000 yuan in a mortgage loan that lasts 25 years.
Furthermore, favorable individual income tax measures have been extended for those selling homes to buy new ones.
Analysts at China Index Holdings (CIH) believe that the intensity of the policy changes has exceeded market expectations and will significantly restore market sentiment and boost confidence.
CIH analysts predict that the easing of policies will have the first impacts on first- and second-tier cities. If these cities respond positively, it will lead to the gradual recovery of the national real estate market.