SHANGHAI: Cuts to down payment ratios and mortgage rates in Beijing, along with the policy optimisations in some of China’s largest cities, will create a better environment for homebuying sentiment in the second half of the year, help boost market confidence and stabilise the entire property market, say realty experts.

After Beijing eased home buying requirements last Wednesday, Shanghai and Guangdong province’s Shenzhen and Guangzhou announced their own comparable policies the following day.

The measures will likely drive market demand in accordance with the unparalleled supportive gesture from Chinese authorities on May 17, said Yan Yuejin, director of Shanghai-based E-house China Research and Development Institution.

Last Wednesday, the housing, finance and provident fund management authorities of Beijing jointly announced a set of favourable policies for homebuyers.

The new measures included lowering the minimum down payment ratio for first-time buyers to 20% from 30%.

For buyers of second homes, the ratio is adjusted down to 30% for areas outside Beijing’s Fifth Ring Road and to 35% for areas within.

The lower limits for home loan interest rates have also been decreased based on the tenor of the benchmark loan prime rate, according to the notice.

“Like all supportive measures, Beijing’s version is hoped to free up potential demand from previous restrictions,” said Li Yujia, chief researcher at the Guangdong Planning Institute’s residential policy research centre.

“Particularly for the young generation and people newly settling down in and around the national capital, the lower down payment requirement will greatly encourage them to purchase a home,” said Li.

Prior to Beijing, the metropolis of Shanghai, and Shenzhen and Guangzhou had issued policies to boost homebuying.

The three cities’ housing markets have seen evident recovery in both new and pre-owned home segments, said Chen Wenjing, director of research with the China Index Academy.

Chen said Beijing’s supportive policies have created favourable conditions for potential homebuyers.

“The measures have sent positive signals that local authorities are striving to shore up market expectations and create a better environment for trading in the housing market,” said Chen.

 - China Daily