Effects of down payment easing, lower transaction costs show in February realty data
Home prices in 100 of the biggest cities in China climbed 0.6 percent month-on-month on average in
Average price of a new property was recorded at 11,092 yuan ($1,690) per square meter, up 5.25 percent year-on-year, with 61 cities recording month-on-month growth in prices.
Analysts said recent government policies have helped in managing diverse risks in first-tier cities where the market tended to get overheated. In second- and lower-tier cities, significant inventories need to be reduced, and further efforts are need to match supply and demand.
In second- and lower-tier cities, recent moves to relax mortgage down-payment requirements have helped boost sales of first and even second homes. Thus, inventories are lower now, analysts said.
The People's Bank of China and the China Banking Regulatory Commission announced in February that the minimum down payment for first-time homebuyers in some regions was reduced from 25 percent to 20 percent of the cost of the property. This move came five months after authorities lowered the applicable down payment rate from 30 percent to 25 percent.
Down payment required for second homes was lowered from 40 percent to 30 percent.
Costs of transaction were also cut further. Deed and business taxes for home purchases were reduced on Feb 22, a measure that aims to boost market demand and clear unsold inventory. This is expected to help second-tier cities where there is already buying interest, said analysts.
Such moves' impact on deals for residential properties in many second-tier cities has been "obvious", said real estate professionals.
Zhao Xinshuo, a real estate agent with Baosha Real Estate Agency in Wuhan, Hubei province, said deals picked up in the past two months as more buyers can now afford the down payment.
The average of home prices in Wuhan climbed from 8,700 yuan per sq m in January to 9,110 yuan in February. Some 13,350 flats were sold in January. The figure rose to 15,295 in February.
Xia Mengju, 42 years old, a prospective flat-buyer in Wuhan, said the measures have certainly spurred home-buying. "I have prepared down payment for a 120-sq-m apartment, and I look forward to closing the deal by the end of this month."
Effective Tuesday, the central bank lowered the reserve requirement ratio by 50 basis points for all financial institutions. Large banks need to pay 17 percent RRR and small banks 15 percent.
Song Yu, chief economist at Goldman Sachs Gao Hua Securities, said in a latest research note that RRR cut will benefit the real estate market by helping reduce inventories on the back of improved liquidity.
James Macdonald, Shanghai-based head of China research with property services provider Savills, said more needs to be done to transmit the housing recovery from leading cities to lower-tier cities while ensuring first- and second-tier cities do not get overheated.
The average price of new homes in Shenzhen Guangdong province, climbed 5.41 percent month-on-month, and 52.55 percent year-on-year, to 47,248 yuan per square meter, while the corresponding price for Shanghai stayed at the January level, but still up 9 percent year-on-year, at 37,144 yuan per sq m, according to CREIS data.
Shenzhen housing authorities said they have been considering measures to curb any undue surge in housing prices, and are prepared to increase supply of affordable housing, and even indemnify such projects, if required.
Homebuyers at the sales center of a property project in Nanjing, Jiangsu province, on Monday. Cities like Nanjing and Shanghai have announced preferential housing tax policies, which have ignited local enthusiasm for homebuying.Provided To China Daily
Applicants at a property transaction center in Huangpu district, Shanghai on Monday.Gao Erqiang / China Daily
(China Daily USA 03/02/2016 page15)