A residential complex built by Evergrande on July 20, 2023 in Huai’an, Jiangsu, China.
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BEIJING – China’s housing ministry has announced plans to make it easier for people to buy property.
News released late Thursday suggests various levels of government are beginning to act just days after Beijing signaled a shift away from its crackdown on real estate speculation.
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Planned measures include easing purchase restrictions for people looking to buy a second home and reducing down payment rates for first-time home buyers, according to an article on the Ministry of Housing and Urban-Rural Development’s website.
To curb speculation in its huge real estate market, China has made it significantly more difficult for people to buy a second home.
According to Natixis, mortgage rates for the second purchase can be a full percentage point higher than for the first, while the down payment rate for second homes in major cities can climb to 70% or 80%, Natixis said.
The Housing Ministry’s article referred to comments made by its minister, Ni Hong, at a recent meeting with eight state-owned and non-state-owned companies in the construction and real estate sectors.
Because it was a central government ministry-level meeting, policies for individual cities were not discussed, said Bruce Pang, JLL’s chief economist and research director for Greater China.
However, he expects Beijing to encourage local governments to announce changes in property policies that suit their specific situation. Pang also pointed out that including construction companies in the meeting highlighted their role in boosting investment and stabilizing growth.
Waiting for details
China has not yet announced any formal measures to promote real estate. However, leaders signaled on Monday that the focus would be more on housing demand than supply.
On Tuesday, China’s State Tax Administration announced “guidelines” for waiving or reducing taxes on housing. It wasn’t immediately clear what the implementation would look like for homebuyers.
We continue to expect the real estate sector to continue its rally and advise investors to focus on beta names in the real estate sector.
The reading of Monday’s Politburo meeting also removed the phrase “Houses are for living, not speculation,” which has been a mantra for Beijing’s tough stance and efforts to curb developers’ heavy reliance on debt for growth.
“It seems that way to us [the housing ministry] will react quickly this time and will also be bolder in easing real estate policy,” Jizhou Dong, analyst for China real estate research at Nomura, said in a statement on Friday.
Given this speed, Dong believes markets will expect concrete policy implementation in cities like Shanghai or Guangzhou.
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Chinese real estate stocks traded in Hong Kong such as desire for, country garden And Greentown China The US dollar traded higher on Friday and is on course to end the week in gains after falling Monday on debt concerns.
“We continue to expect the real estate sector to continue its rally and advise investors to focus on beta names in the real estate sector,” Nomura’s Dong said.
These stocks also include stocks listed in the United States Ke Holdingsand Hong Kong-listed Longfor and China’s Overseas and Investmentstates the report, noting that Nomura has a “buy” rating on all three.
“We continue to advise investors to stay away from weaker private developers.”