BEIJING • China relaxed its housing investment rules for the second time in two weeks yesterday by slashing the downpayment level for most second-home buyers as the authorities try to jump-start growth in a part of the economy that is showing rare signs of buoyancy.
The minimum downpayment level for those buying their second homes and funding their purchases with their housing provident funds will be lowered to 20 per cent from 30 per cent in most cities, the Ministry of Housing and Urban-Rural Development said.
The change, effective from today, applies to all cities except Beijing, Shanghai, Shenzhen and Guangzhou, and only covers buyers with no outstanding mortgages.
The authorities in the excluded cities can set their own minimum level of downpayment, subject to the central government's approval.
The change comes just days after China loosened rules for foreigners to buy real estate across the country, capitalising on signs that the housing market may be stabilising when the rest of the Chinese economy is still struggling.
China's property market, worth around 15 per cent of the world's second-largest economy, affects demand in as many as 40 other industries, from cement to furniture.
Helped in part by five interest rate cuts since last November, China's housing market has steadied in recent months.
Prices rose for a third consecutive month in July as sales and market sentiment improved.
Yet many analysts do not believe the property market is set for a strong rebound due to a large oversupply of homes in many cities outside Beijing, Shanghai, Shenzhen and Guangdong.
It is also unclear if China will succeed in whetting foreign appetite for property as the country's stuttering economy has prompted some investors to pull their funds from the country.
A shock devaluation in the yuan early last month has also fed speculation that the currency could fall further, something the authorities deny but which could fuel capital outflows. Persistent economic weakness and a 30 per cent plunge in share prices have stoked concerns that the economy could suffer a hard landing that will hammer global growth and send global markets into a tailspin.
Many expect China's economy to expand around 7 per cent this year, a rate that will be its worst in a quarter of a century and which some believe is an overstatement of the true growth rate.
Many analysts believe the economy may be expanding at a rate well under 7 per cent as lacklustre growth in exports, manufacturing and domestic investment hurt activity.