Regulatory curbs on borrowing have driven China’s property sector into a sharp downturn, squeezing the cash-flow of many developers and chilling buyer sentiment
A handful of Chinese cities are starting to relax down-payment rules for home purchases in a bid to re-ignite buyer interest and put a floor under local economies weakened by a regulatory crackdown on the indebted sector.
The eastern city of Heze is allowing some home buyers to pay lower down-payments for their purchases, two sources with direct knowledge of the matter said late on Thursday, among the first cities easing the borrowing rule.
Regulatory curbs on borrowing have driven China’s property sector – a major economic growth driver – into a sharp downturn, squeezing the cash-flow of many developers and chilling buyer sentiment.
For buyers with no mortgage history, the minimum down-payment ratio has been cut to 20% from 30%, while the ratio for buyers with one home has been lowered to 25%, with bank loans accounting for the rest of the payment, the sources said.
Local media reported that some banks had agreed to extend more loans in view of the lower down-payment ratio, in a move to help bolster demand.
As far as I know, this is the first city cutting the down-payment ratio for mortgage loans, said Zhiwei Zhang, chief economist at Pinpoint Asset Management. It signals policy easing in the property sector may have entered a new phase.
The housing regulator of Heze, a city of 8.79 million in Shandong province, has not officially announced the move. It did not immediately respond to a Reuters request for comment.
First-time home-buyers in the southwestern city of Chongqing and Ganzhou city in southern Jiangxi province are also being allowed 20% down-payment ratios, according to the state-backed Shanghai Securities Journal.
The down-payment ratio cuts are in cities which have not implemented curbs on home purchases, the Journal said.
