Fresh steps of 2 cities seen aiding home sales

Potential homebuyers look at a residential property model in Shanghai. Provided to CHINA DAILY

Thursday's decision to ease home purchase restrictions in both Beijing and Shanghai is expected to stimulate the local real estate markets and boost confidence in the industry's recovery, experts said on Friday.

If the market perks up soon, it would mark a clear signal that the spirit of the tone-setting Central Economic Work Conference is being upheld at local levels, they said.

On Thursday, both Beijing and Shanghai, China's two biggest cities, announced adjustments to their existing home purchase policies in favor of trading in the housing market.

The Beijing municipal government issued a notice redefining ordinary housing and personal home loans. New measures lowered the down payment on first homes to 30 percent from 35 percent for ordinary housing and to 30 percent from 40 percent for non-ordinary housing.

The minimum down payment ratio for second homes is reduced to 50 percent from up to 80 percent in the six districts in the downtown area, and to 40 percent from up to 80 percent in the six districts in the suburban area.

Shanghai introduced similar policy changes, including lowering minimum first-home down payment ratio to 30 percent from 35 percent, that for second homes to 50 percent from up to 70 percent in urban districts, and to 40 percent from 70 percent in the city's six suburban districts.

More residential properties are now eligible to be identified as ordinary housing, which will enjoy value added tax or VAT exemption if the ownership period exceeds two years.

"Both Beijing and Shanghai used to have stringent requirements for home purchases. But Thursday's measures are in line with market expectations. The new policies will greatly lower home purchase cost, stimulate market activities, help stabilize home prices, facilitate the recovery of industry confidence and stabilize the housing sector nationwide," said Chen Wenjing, director of research at the China Index Academy.

Beijing's new rules also extended the maximum loan tenure from 25 years to 30 years, lowered minimum interest rate requirements for both first and second homes, and extended the definition of ordinary housing. For example, in Beijing, in the past, ordinary housing was supposed to be no bigger than 140 square meters; now, however, flats sized 144 sq m or smaller can be regarded as ordinary housing.

"The differentiated measures for first and second homes, and for housing in and around city center and suburbs, will facilitate better implementation of industry integration strategies in accordance with the local conditions," said Yan Yuejin, director of Shanghai-based E-house China Research and Development Institution.

According to Yan, the previous definition of ordinary housing in Beijing was finalized in 2014, but due to the continued rise in home prices over the past few years, a number of apartments can no longer be called ordinary housing, which means more down payment and more taxes for homebuyers.

"Communications with our customers showed that both home sellers and homebuyers are becoming more optimistic," said Wang Guohui, a senior agent with Sinyi Realty in Shanghai.

"For those planning to trade homes that meet the revised standard of ordinary housing, they are more motivated to reach a deal with the saving on taxation and cuts to down payments," Wang said.

Some 5.3 percentage points of taxes and additional fees would be saved for apartments regarded as ordinary housing, according to the new standards, said Yang Yulei, chief analyst with the Shanghai Lianjia Research Institute.

According to Yang, a person or family buying a flat for a second home, in Shanghai's urban area, with a 30-year home loan of 3 million yuan, can save 16,392 yuan annually in the wake of Thursday's policy adjustment.

The nation's 70 major cities saw their home transaction volumes grow in November, and their home prices had a mixed year-on-year performance last month, said Shen Yun, senior statistician with the National Bureau of Statistics' urban division, on Friday.

According to data from the Ministry of Housing and Urban-Rural Development, from January to November, the proportion of pre-owned home transactions nationwide in total transactions reached a historical high of 37.1 percent. The transaction volume of pre-owned homes has surpassed that of newly built residences in seven provinces and municipalities.

Firm measures are expected to prevent concentrated debt risk outbreaks in the real estate industry, said Dong Jianguo, vice-minister of the Ministry of Housing and Urban-Rural Development, on Wednesday.

Dong said the ministry will continue cooperating with financial regulators to ensure the effective implementation of various real estate policies. He stressed an impartial approach that can cater to the reasonable financing needs of real estate enterprises with different ownership structures.