The Shenzhen government has outlawed a bid by property developers to boost flagging sales by offering to pay half of the regulated 20 per cent minimum down payment required from buyers.
According to property agents the move will stall sales of small-sized units.
With sales faltering under the weight of policy measures to cool down price growth in the market, developers had offered to pay half of the deposit on behalf of buyers, and take delayed payment of the balance when the apartments are delivered - usually some six to nine months later.
But the Shenzhen government cracked down on the scheme last week and insisted that buyers should meet the full 20 per cent down payment themselves. Michael Choi Ngai-min, the chairman of Land Power International Holdings, expected the ban would force first-time home buyers with insufficient cash to match the government's 20 per cent ruling to delay their purchase plans.
'But the scrapping of such a sweetener will only affect flat sales in the low-end residential sector,' he said.
According to government regulations, buyers of units measuring below 90 square metres are required to make a down payment of 20 per cent, while the down payment on flats above 90 sq metres is set at 30 per cent.
On Thursday last week, the Shenzhen municipal government's Bureau of Land Resources and Housing Management ordered developers to stop offering preferential terms and informed banks not to provide loans to the property firms engaged in the marketing scheme.
