Photo: CFP

Beijing and Shanghai on Friday eased mortgage rules to stabilize the real estate sector. This move came two days after Guangzhou and Shenzhen announced similar adjustments. Experts said that action by first-tier cities would likely lead to other localities following suit, which is conducive to the stable development of the property market.

Real estate and finance authorities in Beijing and Shanghai on Friday announced new rules that will allow home buyers to enjoy preferential treatment for first-home purchases regardless of their previous credit record.

China's other two first-tier cities Guangzhou and Shenzhen in South China's Guangdong Province introduced similar adjustments earlier in the week, with experts forecasting China's second-tier cities were likely to adopt similar rules. 

The first-tier cities are generally the weathervane for the national real estate market, and this latest adjustment sends clear signals to the whole market, Yan Yuejin, research director at Shanghai-based E-house China R&D Institute, said in a note sent to the Global Times on Saturday.

East China's Anhui Province on Saturday announced a similar relaxing of mortgage measure, according to official WeChat account "Anhuifabu."

Suzhou in East China's Jiangsu Province and Nanning in South China's Guangxi Zhuang Autonomous Region on Saturday also announced to follow to the easing mortgage rules, local media reported.

These latest supportive measures aim to reduce the cost of buying a home and serve to boost demand. The effects are expected to be measurable as soon as September and October, which is typically peak season for real estate transactions, according to Yan.

This is undoubtedly a positive signal to encourage sustainable growth across the current sluggish real estate market, Song Ding, a research fellow from the China Development Institute, told the Global Times on Saturday.

For a period of time, China has continued to provide relatively relaxed industrial policies and measures to stimulus the property market.

China's top financial regulator on Thursday issued a notice to lower down payments for both first- and second-time homebuyers, while further cutting interest rates on existing mortgages.

According to the notice issued by the People's Bank of China, the central bank, and the National Administration for Financial Regulation, the lowest down payment for first-time home purchasers will be 20 percent, while it will be 30 percent for second-time buyers. 

The difficulties confronting the real estate sector represent a complicated mix of factors from COVID-19, external impacts and imbalanced issues accumulated in the fast economic growth in the past, Song said.

As more supportive measures to kick in, the market expectations and consuming confidence will be stabilized both in the real estate sector and wider ranges in the overall economy, Song said.

Global Times