China has announced a slate of fresh measures to reinvigorate its ailing property industry after the latest data showed housing prices have slumped nearly 10% since the start of the year. The central bank revealed plans to reduce the minimum down payment for mortgages and eliminate the floor on interest rates for first and second homes.
The housing market in China has been struggling since a crackdown on excessive borrowing by property developers, leading to defaults on debts and stalled projects. The government is now rolling out city-specific policies to address the risk of unfinished commercial housing.
Efforts to stimulate home buying have intensified, with interest rate cuts and government-backed financing failing to attract buyers. The announcement by the People’s Bank of China includes interest rate reductions for housing provident fund loans and adjustments to minimum down payments for first and second homes.
The National Bureau of Statistics acknowledged the insufficient domestic demand and high business pressure, prompting further measures to revitalize the property industry. The State Council is set to hold a news conference focusing on these initiatives.
One key strategy involves local governments purchasing unsold apartments to be rented out as affordable housing. A joint task force comprising government agencies and state-owned banks is brainstorming ways to boost the industry.
Despite a 5.3% economic growth rate in the first quarter, signs of weakness persist, with housing starts and sales declining. The government expects demand to rebound as households are encouraged to sell old cars and appliances and purchase new ones.
The measures aim to stabilize the property market and spur economic growth in China amidst ongoing challenges.