BEIJING (Reuters) – Beijing and Shanghai relaxed home purchase restrictions on Thursday, including by lowering the minimum deposit ratio for first and second homes, suggesting renewed efforts by Chinese authorities to revive the sluggish housing market.
The world’s second-biggest economy has struggled to get back on its feet this year after reopening from COVID curbs, largely because its massive property sector has stumbled from one crisis to another in a major blow to consumer and investor confidence.
Despite a slew of support for homebuyers over recent months, the country’s property market has failed to stage robust rebound with property sales, investment and home prices extending declines.
Beijing authorities said in a statement they would lower the minimum deposit ratio for first homes to 30% from 35%-40% previously, effective from Thursday.
The minimum deposit ratio for second homes will be lowered to 50% in the six urban districts and 40% for the non-urban districts from the 60-80% previously, the statement said.
The move is to “strengthen credit support to home purchases and to better meet the rigid and improved household housing demand,” read the statement.
The maximum term of personal housing loans will be extended to 30 years from 25 years, and the floor rate of new mortgages issued by commercial banks after Dec. 15 will also be lowered, according to the statement and state media Xinhua.
The financial hub of Shanghai said on Thursday it will lower the minimum deposit ratio for first homes to 30% from 35% previously from Dec. 15, state media reported, citing the Shanghai housing department.
The minimum deposit ratio for second homes in Shanghai will be lowered to 40-50% from the 50-70% previously, state media reported.
Ratings agency Moody’s last week slapped a downgrade warning on China’s credit rating, citing the property crisis as a factor that could weigh on the economy.
Fitch Ratings also said on Wednesday local government debt might continue to migrate gradually onto the sovereign balance sheet because of pressures from the country’s property market slowdown.
China top leaders pledged at an agenda-setting meeting this week to speed up the establishment of a new model of property development and to quicken the construction of affordable housing.
(Reporting by Ellen Zhang, Qiaoyi Li and Ryan Woo; editing by Christina Fincher)