China eases major mortgage policies to support housing market
Published: Aug 25, 2023 02:20 PM
real estate Photo:Xinhua

real estate Photo:Xinhua

Chinese authorities on Friday announced to further ease mortgage policies to support the real estate market, as family members who do not own a property in a city are now eligible for the credit policy for first-time homebuyers, regardless of whether they have applied for a housing loan previously.

A household whose family members do not own a property at a certain locality is eligible for the credit policy for first-time homebuyers, regardless of whether it has previously applied for a housing loan, according to the notice jointly issued by the Ministry of Housing and Urban-Rural Development, China's central bank and the National Financial Regulatory Administration on Friday.

The policy will be included in the policy toolkit of "one city, one strategy," and city governments can decide on whether to adopt the policy, according to the notice. 

Also on Friday, the Ministry of Finance along with two other departments released a notice to extend the supporting policy from January 1, 2024 to December 31, 2024, targeting individual income tax reductions for those who sell their homes and repurchase another within a year. 

Taxpayers who have purchased a home after selling their previous property within one year can obtain a full refund of the individual income paid for the previous housing if the value of the newly purchased apartment is greater than, or equal to, the value of the home sold previously, according to the ministry.

Experts noted that the issuance of the supportive policy aligns with market expectations, which will play a major role in further stabilizing the nation's housing sector amid its gradual recovery and will better guide follow-up implementation and policymaking for local governments across the country. 

The policy marks the first nationwide relaxing of housing credit policy after the tone-setting meeting of the Political Bureau of the Communist Party of China (CPC) Central Committee in late July and recent State Council executive meeting, which will produce an "immediate effect" on China's real estate market, observers said.

"It is in line with the central government's policy direction for the property market and the market's long-awaited expectations for further support, so the market effect should be visible soon," Yan Yuejin, research director at Shanghai-based E-house China R&D Institute, told the Global Times on Friday. 

Yan describe the policy as a "timely" boost as China's property market is at a critical stage of recovering and stabilizing. Policies from the central authorities also provide a beacon upon which local policymakers could draw upon, he noted.

Under the policy, Chinese consumers are able to enjoy the dual policy of "down payment and mortgage interest rate" for first-time homebuyers, Yan said. Down payments have been reduced to 33 percent of the total house price from 73 percent. 

Yan exemplified by purchasing a property valued at 6 million yuan ($823,192). The down payment is brought down by 2.4 million yuan, significantly reduce the stress on homebuyers. 

Currently, the average lending interest rate for first-time homebuyers is 4.5 percent, compared with an average of 5.03 percent for people who have more than one apartment, which is estimated to reduce an average of mortgage payment of 470,000 yuan in 30 years in first-tier cities.

Ni Hong, minister of housing and urban-rural development, urged to continue efforts to consolidate the recovery trend of the property market at a symposium with property developers in July. 

Ni stressed the significance of meeting residents' essential housing demand and their need for better living conditions. He also called for fully implementing favorable measures, including lower down payment requirements and mortgage rates for first-time homebuyers. He also called for efforts to ensure the delivery of presold homes.

The tone-setting meeting noted that real estate policies should be adjusted and optimized in a timely manner, adding that the policy toolkit should be well utilized with city-specific measures to better meet residents' essential housing demand and their needs for better housing, and advance the stable and sound development of the real estate market, according to the Xinhua News Agency.

Global Times