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Second homes need lower down payment

2015/9/1 9:52:12   source:China Daily

  Apartment towers are seen in the southern Chinese city of Shenzhen Aug 28, 2015. [Photo/Agencies]

  China lowered the down payment for those who use their housing provident funds to buy asecond home, signaling its intention to prop up the property market in a time of batteredconfidence.

  In a statement jointly released by the Ministry of Housing and Urban-rural Development, Ministryof Finance and the central bank on Monday, the minimum payment for buyers who use theirhousing funds to buy a second home was lowered to 20 percent from 30 percent, if buyers hadpaid off their previous mortgage.

  The statement also said the four most expensive cities in China-Beijing, Shanghai, Guangzhouand Shenzhen-could decide by themselves whether to follow the move.

  The move will give second-home buyers the same policies enjoyed by first-time buyers, whichwould encourage more potential buyers to purchase second homes. The move followed lastTuesday's interest rate cut, after which the benchmark lending rate for five-year or longer loanswas lowered to 5.15 percent. The same rate for housing provident fund loans was lowered to3.25 percent, the lowest in history.

  The interest rate cut was followed by last Thursday's decision to ease previous restrictions onforeign institutions and individuals buying properties in China.

  "Current housing policies might be the most accommodating in years, as policymakers areconcerned with the recent disappointing economic data and eroding confidence," said YanYuejin, a Shanghai-based analyst with E-house China R & D Institute. The real estate andconstruction sectors make up about a third of the economy.

  China's real estate investment growth further slumped to 4.3 percent in the first seven months,according to the National Bureau of Statistics. It was still a drag on GDP that is growing at 7percent, but analysts believe investment has already hit the bottom as property sales haverebounded since the second quarter, also due to policy easings.

  The latest survey of home prices, released on Monday, showed the average home price in 100cities monitored by China Index Academy, a research company owned by SouFun Holding, rose0.95 percent in August, an acceleration from July's 0.54 percent growth.

  The batch of stimulus policies, combined with fresh construction projects offered in the market,will make for robust housing sales in September and October, China Index Academy said.

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