BEIJING, Oct. 2 (Xinhua) -- China has been actively rolling out policies to cater to the residential sales market and boost the healthy development of the real estate sector, including policies to ease restrictions on the classification of first-home buyers, lower existing first-home loan rates, and extend tax incentives.
Major changes have taken place in the relationship between supply and demand in China's real estate market, according to a high-level meeting held in late July that called for the timely adjustment and improvement of policies in the property sector.
Analysts say the positive signals from the key meeting have boosted confidence in the property market, and that the country's policy toolkit has since been utilized to meet the essential housing demand of residents and their demand for better housing.
In late August, the Ministry of Housing and Urban-Rural Development proposed a policy option for local governments that would deem households that do not own a home in a certain locality to be first-home buyers in that locality when applying for a mortgage from a bank.
Previously, a home buyer would have been seen as a second-home buyer if he or she had a mortgage or house ownership record. The down-payment ratios and lending rates for second-home buyers are higher than those for first-home buyers.
The proposed criteria adjustment was adopted by many cities the following week, including the four first-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen, where the policy support has started to result in more brisk trading.
Lower down-payment requirements have prompted transactions, according to Guan Chong, regional general manager for east China at China Jinmao. One of his company's properties saw a daily visit and transaction volume expansion of 150 to 200 percent on the weekend after the adjustment took effect.
In September, the total sales of the country's top 100 real estate developers surged 24.8 percent month on month, according to a report released by the China Index Academy property research institution.
The policy incentives can spur demand among cross-city commuters or those looking to improve their living conditions, promoting the virtuous cycle of the real estate sector, said Li Yujia, chief researcher at the Guangdong Housing Policy Research Center.
In addition to easing mortgage rules, China has also announced that it will lower the interest rates of existing mortgages for first-home purchases.
According to analysts, this lowering of mortgage rates will benefit about 40 million borrowers. At the end of June, China's outstanding individual home loans totaled 38.6 trillion yuan (about 5.38 trillion U.S. dollars).
The reduction in interest expenses for borrowers is conducive to easing the burden on home buyers and lifting their consumption willingness, said Chen Wenjing, director of research at the China Index Academy, noting that the early mortgage repayment rush will be eased for commercial banks.
Fiscal support for the property market has also been stepped up. The Ministry of Finance and two other government bodies announced in late August that tax incentives for residential purchases, first introduced in 2022 and originally scheduled to expire at the end of this year, would be extended to the end of 2025.
From Jan. 1, 2024, to Dec. 31, 2025, a taxpayer who buys a new home within one year of selling their old home in the same city will benefit from a personal income tax refund on the sale, according to the finance ministry.
He Daixin, a researcher at the Chinese Academy of Social Science, said the extension of the incentive policy will support residents in improving their housing conditions, and stabilize expectations and boost confidence.
With supporting policies taking effect, home buyer sentiment will improve, but property markets in different cities will perform differently, Chen said.
Song Hongwei, research director at real estate consultant firm Tospur, said the first-tier cities will be the first to experience the policy adjustments and see increases in current-home sales and new-home purchases.
The trend will gradually spread to smaller cities, which will also see more active housing markets, according to Song.
Multiple measures from both the supply and demand sides are still needed to bolster the stable and sound development of the property market, Li said, noting that developers should be encouraged to provide reasonable prices and efforts should be made to increase resident incomes and improve employment.