A real estate agent looks at a housing model displayed by a property developer in Hong Kong. (Photo : REUTERS)
The People's Bank of China (PBOC) has lowered on Tuesday, Feb. 2, the minimum downpayment for first-time homebuyers in a bid to revive the country's urban housing market, the second time the central bank has done it in less than five months, China Daily reported.
According to the announcement from the PBOC and the China Banking Regulatory Commission (CBRC), the downpayments for first-time homebuyers would be reduced from 25 percent to 20 percent, a move that economists described as "pointing to the healthy growth of the market."
Data released by the National Bureau of Statistics showed that unsold homes in China rose by 11.2 percent last year, reaching a total of 452 million square meters.
China had lowered the minimum downpayment requirement in October last year from 30 percent to 25 percent to prevent the rapid rise in the prices of urban housing.
Zhao Xijun, deputy dean of the School of Finance at Renmin University of China in Beijing, said that the recent adjustment in downpayment would help reduce the inventory of unsold housing in the face of economic slowdown and dull business.
According to the joint statement of the PBOC and the CBRC, the rate reduction for first-time buyers will also include the lowering of downpayment for second homes from 40 percent to 30 percent.
The report, however, said that the revised percentages do not apply in first-tier cities such as Beijing, Shanghai, Shenzhen and Guangzhou, where restrictions against speculative home purchases remain in place.
The lowering of downpayments would benefit the housing market in small towns near large cities, industry specialists said.
Yan Yuejin, a researcher at E-house China R&D Institute, said this would result in immediate surge in housing sales in places like Langfang and Yanjiao in Hebei Province, which are both only about an hour's drive from Beijing.
Zhang Dawei, chief market analyst at Zhongyuan Real Estate Co., also noted that the timing is important as many people head for family reunions during the Chinese New Year and the new policy could arouse their interest in buying real estate in their hometowns.
The average new home price in China's 100 major cities rose by 0.42 percent in January month-on-month to 11,026 yuan ($1,675) per square meter, data from the China Index Academy, a private sector research firm, showed.
