To improve the gloomy real estate market, the Chinese Communist Party (CCP) local authorities in more than 100 cities in China have launched a new promotion policy. As a result, customers can now reduce the prepayment rate when buying a home.
Specifically, according to Da Ji Yuan‘s report on November 22, at least 115 cities have decided to reduce the down prepayment for customers when buying a home to 20%.
Some cities also offer additional incentive policies. Among them, the City of Chengdu introduced a policy reducing the down prepayment rate for the second home from 40% to 30%.
Some cities have additional policies that allow residents who have paid off the loan on their first home to enjoy a 20% down prepayment policy when buying a second home.
In addition, the Central Bank of China has set the interest rate for first-time home loans below 4.1%. It also allows localities to reduce interest rates below this level.
Currently, more than 20 cities have lowered the interest rate for first-time home loans to less than 4% to stimulate demand to buy houses.
Despite the CCP’s push to boost the property market, some economists still forecast that the authorities’ new measures will fail to be successful in the immediate future.
Zhang Dawei, the chief analyst at Centaline Property Agency Ltd, predicts that the Chinese property market will remain relatively stagnant for the rest of this year.
Yan Yuejin, director of the E-house China Research and Development Institution, believes that property prices in China will maintain a year-on-year decline through the first half of next year.
Meanwhile, Barclays Bank estimates mainland property sales next year will fall another 10%.