China’s Ministry of Housing and Urban-Rural Development has unveiled plans to simplify the property purchasing process. This development comes shortly after Beijing hinted at a shift away from its crackdown on real estate speculation. The proposed measures include relaxing restrictions on purchasing second homes and reducing down payment ratios for first-time homebuyers, according to the ministry’s website.
China has previously implemented stringent measures to curb speculation in its property market, making it difficult for individuals to buy second homes. Mortgage rates for second homes can be significantly higher than those for first homes, and the down payment ratio for second homes can skyrocket to 70% or 80% in major cities.
The housing ministry referred to comments made by Minister Ni Hong during a recent meeting with state-owned and non-state-owned construction and real estate companies. While the meeting focused on central government policies rather than city-specific ones, experts anticipate that Beijing will encourage local governments to announce changes relevant to their specific circumstances. The inclusion of construction companies in the meeting underscores their role in driving investment and stabilizing economic growth.
Although formal measures to support the real estate market have not yet been announced, Chinese leaders have indicated a greater emphasis on housing demand rather than supply. The State Taxation Administration recently issued guidelines for waiving or reducing housing-related taxes, but the implementation details for home buyers remain unclear.
The removal of the phrase “houses are for living in, not speculation” from the readout of Monday’s Politburo meeting suggests a change in Beijing’s approach to real estate. Observers view the quick and more relaxed property policies from the housing ministry as a positive development. Market participants are now anticipating specific policy implementations in cities such as Shanghai or Guangzhou.
Chinese property stocks, including Longfor, Country Garden, and Greentown China, witnessed gains on Friday after a steep decline earlier in the week due to debt concerns. Nomura analysts recommend focusing on beta names within the property sector and advise investors to stay away from weaker privately-owned developers.
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