By YANG Bingke
Beijing and Shanghai loosened home buying restrictions again on Thursday. The government in Beijing said it would cut the downpayment requirement for first homes from 35 percent to 30 percent of the purchase price. The minimum deposit for second homes is lowered to 40 to 50 percent, depending on the type of the house, from the previous 60 to 80 percent.
The longest term is extended from 25 to 30 years. Eligibility criteria for non-luxury houses are relaxed, which by some estimates would push the percentage of non-luxury houses from 30 percent up to 70 percent. This would allow buyers better mortgage rates.
Minimum mortgage rates are lowered by about 0.05 percent for both first and second homes.
The government in Shanghai issued similar policy changes. The minimum down payment ratio is lowered to 30 percent for first homes and 40 or 50 percent for second homes depending on the location. Previous minimums were 35 percent and 50 or 70 percent.
The government has been trying to reinvigorate the real estate market, which constitutes about 30 percent of the economy. The high-profile defaults of a few heavily indebted developers have sent house prices tumbling, as buyers wonder if developers can finish building houses already paid for. Buying restrictions to curb speculation also suppressed demand and thus price expectations.
The government in many big cities relaxed restrictions in September to stimulate demand. Industry insiders hope the new policies in Beijing and Shanghai will spark a small boom in the busy season around Chinese New Year.
