What’s new: Zhengzhou has launched a slew of measures to shore up its sluggish real estate market, including lowering the down-payment requirements for second home – the first major city to do so since 2016, according to analysts at brokerage Ping An Securities Co. Ltd.
Authorities in the Central China metropolis will lower the down-payment requirement from 60% to 30% of the mortgage for those buying second homes, as long as they have paid off the mortgage for their first home.
To encourage demand, the city government will urge financial institutions to fund homebuyers and cut mortgage rates, according to an official document (link in Chinese) issued Tuesday which contains 19 measures.
On the supply side, the capital of Henan province plans to help property firms ease liquidity pressure, including allowing them to pay land purchase fees over a longer period, urging lenders to extend loan payment deadlines for distressed developers, and offering preferential policies to lenders who issue more loans to firms to develop property projects.
The context: As China’s real estate market continue to struggle with shrinking sales and languishing confidence, local governments have begun to take stronger measures to uplift demand and supply.
With a population of 12.6 million, Zhengzhou is the first “second-tier” city to throw a lifeline to its property market this year, according to analysts at China Real Estate Information Corp. (CRIC) on Tuesday. Second-tier cities include major large cities in China excluding Beijing, Shanghai, Shenzhen and Guangzhou.
The CRIC analysts said the measures indicate that policymakers could be more tolerant to local governments’ relaxing property policies, which means more cities could follow suit to take stronger measures to ease property firms’ liquidity crunch and restore market confidence.
Related: China's Property Market Gets Bleaker Despite Policy Support
Contact reporter Guo Yingzhe (yingzheguo@caixin.com) and editor Bertrand Teo (bertrandteo@caixin.com)
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