China's capital eases home buying curbs, trailing Tier 1 peers

Lower down payments and mortgage rates among measures to revive market in Beijing

- Joyce ZK Lim

China’s capital has loosened curbs on home purchases, the last of the country’s most developed cities to do so, in efforts to revive the struggling property sector.

Under measures announced on June 26 and effective from the next day, home buyers in Beijing will enjoy lower down payments and interest rates on mortgages.

Beijing’s move comes after the country unveiled sweeping measures on May 17 to reverse a protracted real estate slump, among them national guidelines on cutting down payments and mortgage rates.

In the weeks since, localities across the country have followed up to implement more supportive housing policies. Beijing’s roll-out lagged behind its Tier 1 city counterparts Shanghai, Shenzhen and Guangzhou – termed as the country’s most developed cities – by almost a month.

Analysts told The Straits Times that the relaxed restrictions on home buying have helped to stimulate consumers’ interest in purchasing homes, which had long been stymied by a persistent slide in prices. But whether this will translate into an actual housing market recovery still remains to be seen.

Beijing has lowered the minimum down payment first-time home buyers must make upfront from 30 per cent to 20 per cent of the total purchase cost. The minimum rate for second-time buyers has also been reduced to 35 per cent in urban areas and 30 per cent outside them, down from 40 per cent to 50 per cent.