Beijing Falls in Line With Other Top Chinese Cities to Help Home Buyers

By Jiahui Huang

Beijing became the last major Chinese city to trim mortgage rates and down-payment requirements for home buyers, part of growing efforts across the country to resolve a long-running property crisis.

Authorities in China's capital said late Wednesday that they will reduce minimum down-payment ratios for first-time buyers to 20% from 30% and for second homes to 30% and 35% from 40% and 50%, respectively, depending on location. They also lowered the commercial mortgage rate by up to 55 basis points.

Families with more than one child can now buy second homes under the first-home rules, officials said. They also said the government will push for programs to replace old apartments, with Beijing's real-estate industry associations setting up a platform for developers and agents to help residents sell their old homes and buy new ones, similar to a structure in place in Shenzhen.

The measures were largely in line with market expectations after the other first-tier cities--Shanghai, Shenzhen and Guangzhou--eased home-buying curbs shortly after China's top leaders shifted their tone in encouraging lower mortgage rates and down payments on May 17.

Beijing's action was slower than expected, Nomura analysts Jizhou Dong and Riley Jin wrote in a research note. The city also didn't remove home-buying restrictions entirely, taking a more conservative approach than Shanghai that is expected to have a limited impact on local property-sales sentiment, the analysts said.

China's home sales haven't improved significantly since the aggressive stimulus measures in late May. Home sales by value dropped 30.5% in the first five months of 2024 from a year earlier, data from the National Bureau of Statistics showed.

Daiwa analyst William Wu said in a note that the impact of Beijing's move "will be short-lived with home prices falling at an accelerated pace."

In major cities, new home prices fell 4.3% in May, worse than the 3.5% drop in April, official data showed.

Morningstar analyst Jeff Zhang said the plans to replace old apartments may help address excess housing inventory, but execution risks remain, as it could take a "long cycle for existing units to be sold amid significant oversupply."

Beijing's move is likely already priced in by the stock market, Daiwa's Wu said. The Hang Seng Mainland Properties Index, which tracks Chinese real-estate developers listed in Hong Kong, was 2.3% lower by midday Thursday. Longfor Group fell 3.0%, Yuexiu Property dropped 2.9% and China Vanke lost 2.2%.

Write to Jiahui Huang at jiahui.huang@wsj.com

(END) Dow Jones Newswires

June 27, 2024 00:49 ET (04:49 GMT)

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