China is taking steps to support its weakening housing market in a fresh sign that the country’s leaders are worried about economic growth.
Buyers of second homes must now make a minimum down payment of 40 percent, instead of 60 percent previously. The aim is to encourage people to upgrade to better homes.
Property owners will be exempt from paying a business tax on the sale of an ordinary home if they have owned it for at least two years, instead of five years previously. The tax, which is about 5.5 percent, is usually paid by the homebuyers.
Buyers of first homes who borrow from their local housing provident funds will have to pay a minimum 20 percent down payment, instead of 30 percent.
The new rules, announced by the People’s Bank of China, the housing ministry and the banking regulator, signal that Beijing is increasingly worried that the weak property sector is hampering growth, The Wall Street Journal said.
“It’s a sign that the policy makers are becoming more anxious,” the newspaper quoted Rosealea Yao, an analyst at Gavekal Dragonomics, as saying.
But some analysts don’t think these measures will do much to reduce the large inventories of homes in China’s less-developed cities. The property markets in Beijing and Shanghai have been stronger than those of other cities.
“In the short term, there might be a boost in sales as people return to the housing market in hopes for reform and further loosening measures, but it’s still a question mark regarding how effective the lowered rates would be in reviving the market in the longer term,” Yao said.
Average home prices fell from a year earlier for the 10th month in a row in February, as property developers struggled with excess inventory and cut prices to entice home buyers.
– Contact us at [email protected]