Shanghai eases housing curbs as aid spreads to big cities
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Shanghai eased requirements for home downpayments and mortgages.
PHOTO: BLOOMBERG
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SHANGHAI – Financial hub Shanghai has eased requirements for home down payments and mortgages, as bigger Chinese cities follow through on the central government’s aid for the property sector.
The city reduced downpayment ratios by 10 percentage points to a minimum of 20 per cent for first-time buyers and 30 per cent for second-home purchasers, according to a statement on May 27. The floor for mortgage rates was also lowered.
The relaxation follows China’s most forceful rescue package this month, when the central bank unleashed 300 billion yuan (S$56.7 billion) of funding to help local governments buy unsold homes.
Officials are trying to revive confidence crushed by falling prices, unfinished apartments and job insecurity.
Analysts including those at UBS Group and Morgan Stanley expect top-tier cities to follow Shanghai’s lead, improving the outlook for market sentiment and sales.
A Bloomberg gauge of Chinese developer shares rose as much as 2.4 per cent on May 28. Shimao Group Holdings, which operates in big cities including Shanghai, jumped as much as 16 per cent in Hong Kong.
The central government recently allowed the local authorities to cut the minimum down-payment ratio and make their own decisions for mortgage rates.
Shanghai’s latest easing comes after it reduced last September downpayment ratios and eased the threshold for some types of housing to qualify for lower mortgages.
Since then, it had announced only a marginal loosening in January to allow some non-local residents to buy one property in outskirt areas. BLOOMBERG
