A view of a residential property project under construction in Hangzhou, East China’s Zhejiang Province on May 9, 2024. The city announced the same day that it will lift all home purchase restrictions, making it among the first Chinese cities to completely abolish purchase restrictions amid a nationwide effort to shore up the real estate market. Photo: VCG

China on Friday announced several "ground-shaking" policies for the real estate sector, namely the down payment ratio of home purchases lowered to 15 percent, the interest rate of provident fund loans lowered, the lower limit of mortgage interest rates abolished, and the inventory of commercial housing acquired by local governments as indemnificatory housing.

Analysts said that the level of relaxation of the property-related policies is unprecedented in decades, which will be a historic boost for homebuyers with a far-reaching impact. The measures will greatly boost property sales and the recovery of the housing market.

Stocks related to real estate immediately rose after the announcement of the measures, with several stocks surging to hit the daily limit. The Shanghai Property Index rose 3 percent.

China has lowered the minimum down payment for first-time homebuyers to 15 percent, down from the previous 20 percent. The minimum down payment proportion for a second home purchase is also lowered to 25 percent, several government departments said on Friday during a joint press briefing.

Analysts said the lowered down payment requirement represents the most significant move in down payment policy relaxation for China's housing sector, which will largely stimulate property sales. The move fully showed that the country attaches great importance to property destocking and supporting reasonable housing consumption demand, analysts said.

"This is the lowest down payment ratio in history, the slackest policy in the history of mortgage lending, and the most lenient property policy in recent years," Yan Yuejin, research director at Shanghai-based E-house China R&D Institute, told the Global Times on Friday.

China's central bank said on Friday that it would lower the interest rate for housing provident fund loans by 0.25 percentage points for both first-time and second-time homebuyers from Saturday.

The housing provident fund is a long-term housing savings plan made up of compulsory monthly deposits by both employers and employees. It can only be used by employees for house-related expenses, according to the State Council, China's cabinet.

Meanwhile, authorities abolished the lower limit of the interest rate for commercial individual housing loans at the national level.

"In the past, the lowest house loan interest rate in some cities was 3.5 percent. But under the current policy, banks can decide the interest rate themselves, and even an interest rate below 3 percent is acceptable. This is also an important embodiment of mortgage interest rate marketization," Yan said.

Global Times