BEIJING: A flurry of Chinese cities are rolling out measures to boost housing demand, signalling the government’s intention to arrest a property crisis.

Various local governments have issued at least 70 property easing measures since President Xi Jinping’s Politburo called for efforts from local governments to defuse the property crisis.

More than 120 Chinese cities have this year loosened policies that restrict the use of housing provident funds to buy properties, the Securities Daily reported yesterday.

China’s US$2.4 trillion new-home market has shown little sign of recovery, adding to the woes of an economy that barely expanded in the second quarter.

Mortgage boycotts by homebuyers waiting for apartments to be completed have damped consumer confidence, putting further pressure on home prices, which have fallen for 11 straight months.

While the central government has avoided outright stimulus, it’s been giving tacit approval to local authorities to unwind property austerity measures.

In late August, the state council led by Premier Li Keqiang said local governments should use city-specific credit policies to support necessary housing demand.

Similar signals were issued in April, after the Communist Party’s Politburo led by Xi said local governments could “refine” housing measures to ensure stability in the property market.

Chinese cities are likely to continue optimising property policies based on their own situation, adopting measures such as improving financing conditions for local developers, Golden Credit Rating analyst Wang Qing was cited as saying.

The easing of housing provident funds is just one example of the measures being taken.

Cities operate such funds where employees contribute a portion of their salary each month to the pool, which they can tap and borrow discounted loans from to buy a home.

A few so-called tier two cities, or regional hubs, lowered down-payment thresholds for a second residence by as much as 20 percentage points.

Those include Nanjing, Suzhou and Wuxi.

At least 24 cities have allowed parents to fund their children’s home purchases by drawing on their own housing provident funds and helping repay their mortgages, the Securities Daily said on Sept 9.

The eastern city of Suzhou cancelled a requirement for first-time homebuyers without a local residential permit to pay social insurance, China Business News reported Wednesday.

The southern city of Liuyang announced home-purchase subsidies and more credit support, the China Securities Journal reported Monday.

Northern Langfang city, which is about a one-hour drive from Beijing, said on Aug 9 that it would unwind austerity measures including a ban that restricted non-locals from buying property.

Changchun, the capital of northern Jilin province, plans to give out home-buying subsidies.

Shanghai said on Aug 20 it would ease buying curbs in the suburban Lingang area, home to advanced manufacturers including Tesla Inc.

Non-locals working for companies there are now allowed to buy one residence after a year.

Some cities, including Taizhou in eastern Jiangsu province, adjusted down payment requirements for home buyers backed by the provident fund.

Still, such measures are unlikely to revive home sales anytime soon, particularly with the prospect of more Covid lockdowns and a grim labour market weighing on demand, according to Bank of America Corp.

“Even with more policy easing by local governments, we believe the negative sentiment shocks will unlikely abate soon,” Bank of America economists including Helen Qiao wrote in a Sept 12 note.

“It could take time to restore home buyers’ confidence.”

 - Bloomberg