East China's Fujian Province has eased curbs on home purchases amid a cooling property market, China Business Journal (CBJ) reported Monday, citing industry insiders.
The eased measures were announced orally to local government agencies and industry figures such as developers for feedback rather than presented as a printed official document, the CBJ reported, citing local property developers.
Phone calls by the Global Times to Fujian authorities went unanswered on Monday.
The informal notice covered the loosening of restrictions on household registration, tax and social security requirements for home purchases, and plans to cap the mortgage rate at 1.1 times the benchmark for the purchase of second homes for improving living conditions, according to the report.
Fuzhou, capital of Fujian Province, saw its home sales in terms of floor areas more than halved as the average home price more than doubled over the past five years, stock information portal aastocks.com reported on Monday.
This news came after media reports of massive home price discounts in cities like Hangzhou of East China's Zhejiang Province and Changzhou of East China's Jiangsu Province.
Since March, 20 property developers in Guangzhou have been offering "zero down-payments" to attract buyers, in addition to large discounts and tax refund, the National Business Daily reported Monday.
New residential building sales volume in Guangzhou fell by 40 percent in the first quarter from a year ago, according to the report.
China's red-hot home market began cooling because of continued government curbs on speculative buying and as banks made it harder for homebuyers and small developers to get loans.
The weakening property sector has triggered market concern about a bubble in the property sector, and possible financial risks caused by massive default of bank loans lent to property developers and homebuyers as well as inflating local government debt.
Zhejiang Xingrun Real Estate Co was reported in March to be struggling to repay its 3.5 billion yuan ($560 million) debt, highlighting the risks that many smaller property firms encounter in smaller cities.
So far this year, a total of six small to medium-sized banks, including Minsheng Banking Corp, Bank of Hangzhou and Ping An Bank, have suspended mortgage loans to customers in Beijing partly due to fear of rising default risks, rong360.com, an online loan service provider, told the Global Times in a note on Monday.
With sluggish home sales and price cuts, the reduced cash flow of property developers will lead to a slump in land sales which in return will cut local fiscal revenues.
It is not possible for China's housing market to collapse this year despite a weak beginning, China Business News reported Monday, citing Wang Juelin, former deputy director of the Policy Research Center at the
Ministry of Housing and Urban-Rural Development.
Wang believes that the weak housing market this year is due to the high base effect of last year - a crazy moment for home buying, which makes this year's sales modest by comparison.
The housing market is still steady based on property investment and land purchase data, he said.